Risk and Dividend Policy of Quoted Manufacturing Firms: A Panel Study from Nigeria
Vol.6 Issue 2
This study examined the effect of risk on dividend policy of quoted manufacturing firms in Nigeria. Panel data was sourced from financial statement of the manufacturing firms’ from2009-2018. Dividend policy was proxy for dependent variable while risk was proxied by exchange rate risk, equity price risk, interest rate risk, operational risk, leverage risk, liquidity risk. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study. Result from model I indicated that interest rate risk, exchange rate risk and equity price risk have positive effect, while consumer price risk have negative effect on the dividend policy while model 2 found that liquidity risk have positive effect while cash flow risk, leverage risk and operational risk have negative effect on the dividend policy. From the findings, the study concludes that risk have significant effect on dividend policy of quoted manufacturing firms in Nigeria. We recommend that internal and external factors such as corporate size, liquidity, capital structure that affect systemic and unsystematic risk of quoted manufacturing firms should be taken into consideration in formulating financial policies. Managers should ensure that risk within the operating environment be integrated in dividend policy of quoted manufacturing firms and that corporate financial policies such as leverage, liquidity and cash flow that affect and investment, financing policy and dividend policy should be considered in management planning.
