Dividends Policy and Firm Performance of Manufacturing Firms in Nigeria: A Moderating Effect of Foreign Ownership

Abstract

Company performance is crucial for a company's success, benefiting stakeholders like creditors,
consumers, and employees. In Nigeria, the challenging business environment has led to large
corporations leaving, with many adopting low payout strategies. The effects of dividend payouts
vary, with high payouts resulting in slower growth and lower market prices. This study aims to
investigate the moderating effect of foreign ownership on the relationship between dividend policy
and firm performance in Nigerian manufacturing companies listed on the Nigerian Stock Exchange
(2018-2022), using secondary data collected from foreign-owned companies. An ex post facto
research design was adopted as the entails the use of annual reports and accounts of 21 consumer
goods companies. The sample size includes nine selected firms, obtained using filtering criteria.
The study employs STATA version 17 to run for descriptive and inferential statistics. The results
discovered a statistically insignificant relationship between dividend pay-out ratio (DPR), dividend
yield (DY), dividend coverage ratio (DCR) and ROE. The finding also reveals a statistically
insignificant moderating effect of foreign ownership on the relationship between DPR, DY, DCR
and ROE. Therefore, the study concluded that there is no significant relationship between dividend
policy and firm financial performance. In like manner, foreign ownership does not have a
significant moderating effect on the relationship between dividend policy and firm financial
performance of the manufacturing companies in Nigeria. The study recommends that managers
should consider factors affecting firm financial performance, promote transparency, and maintain
a strong dividend policy. Executing policies that boost financial accountability and transparency
can build investor confidence and support sustainable economic growth.