Empirical Examination of the Determinants of Dividend Payout of Quoted Agro based Firms in Nigeria

Abstract

This study examines the factors affecting dividend payout of quoted agro-based firms in Nigeria. Data sourced from
a sample of 15 agro-based firms for the period 2007-2013 were analyzed using the modified Litner’s model base on
Ordinary Least Squares (OLS). Data were first examined for stationarity using the Augmented Dickey Fuller (ADF)
test. Result revealed that all the variables were stationary at levels except leverage, liquidity and retained earnings
that were stationary at first difference. The OLS result showed that previous dividend, profitability and firm size
exerted significant positive influence on dividend payout while firm leverage and business risk exerted significant
negative influence on dividend payout. Surprisingly, firm liquidity, Taxes and Retained Earnings failed to explain
the variation in dividend payout of these firms. This, therefore, suggest the need to pursue policies that would
minimize investment in risky projects, foster dividend payment through the reduction in retained earnings and
enhancing firm’s profitability through tax reduction, exemption and rebate as well as discouraging excessive
leverage as the way out.