They emphasized that liquidity is a good mediator between firm performance and dividend payout and firm performance has a significant impact on the dividend pay-out ratios for firms in Nigeria.
The major finding of their study was that a company with higher internal ownership structure tends to give less divided and institutional investors tend to demand higher dividend pay-out ratio. Leverage and dividend policy have an inverse relationship while profitability and liquidity have a positive relation with the dividend policy; also growth-firms tend to distribute higher dividends.
Dividend pay-out ratio was considered a measure of the company paying dividend.
After conducting the factor analysis, multiple regression was done on the factor scores as independent variables and the dividend pay-out ratio of 2016 as the dependent variable.
Large market capitalisation, and high PAT indicate high market values and profitability increasing the dividend pay-out ratio of the company.
Since all factors considered above have a positive sign while generating the factor score and the combined impact of all factors is considered to be positively related to dividend pay-out ratio, hence the expected sign of the factor is positive.
RRE, EPS and pay-out ratio 2015 in the fourth factor returns to shareholders have negative, negative and positive correlations respectively.
return on net worth and dividend pay-out ratio of previous year.
According to this observation, ROI and dividend pay-out ratio are positively correlated.