ORGANISATIONAL PERFORMANCE AND DIVIDEND PAYMENT ON LISTED OIL

OIL AND GAS FIRM IN NIGERIA.

BY:

BABANIJI KANYINSOLA VICTORIA

H/AC/21/6413

A PROJECT REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENT FOR THE AWARD OF HIGHER NATIONAL DIPLOMA IN
ACCOUNTANCY, SCHOOL OF MANAGEMENT STUDIES, FEDERAL
POLYTECHNIC ILARO, OGUN STATE.

NOVEMBER, 2023.
 CERTIFICATION

This is to certify that this project was carried out by BABANIJI KANYINSOLA VICTORIA
with matriculation number (H/AC/21/6413) and respectively under the supervision of Mrs Mrs
Ajao C.C. ACA in the Department of Accountancy.

_________________________
Mrs Ajao C.C ACA
Supervisor’s Signature & Date

_____________________________
Barrister. E. A. Ademola, ACA, ACTI
Head of Department’s Signature & Date
 DEDICATION

This research work is dedicated to the Almighty God for his love, mercy, grace, favour and

guidance over me throughout my course of study and stay in Ilaro and to my parents for their

financial support, love and prayer.

 ACKNOWLEDGEMENTS

The completion of this study would have been impossible without the material and moral support
from various people. It is my obligation therefore to extend my gratitude to them. First of all, I
thank Almighty God for giving me good health, and guiding me through the entire courses.

I am greatly indebted to my supervisor Mrs Ajao C.C ACA for his effective supervision,
dedication, availability and professional advice, may God continue to bless him. I extend my
gratitude to the Head of Department Barrister E. A ACA and other lecturers in the Department of
Accountany, Mr Fatoki, O. J, Dr. Mohammed, S. R. FCA, Dr.Agbeyangi, B. A. FCA., Mrs
Oduwole F.R. Mr Olawore, O. O., Mr Busari, I. A., Mr Balogun, S. B., Mrs Ajao, C.C. (ACA).,
Mr Abubakar, I., Miss Edeh, B. ACA, Mrs Ajimati, O. B. Mrs Akintoye R.O. and Mr Olaoye S.
for their selfless efforts and their individual contribution during the course of study.

My profound gratitude to my parents Mr & Mrs BABANIJI whose immense financial supports,
advice and prayers, brought me to the level I am today which cannot be quantified monetarily.
My unreserved appreciation goes to my siblings for their encouragement, advice, financial
contribution and prayers which has really helped me greatly in seeing the success of my
program.
 ABSTRACT

The purpose of this study was to examine effect of organizational performance on

dividend payment of listed oil and gas firm in Nigeria. The objective of this study were to
determine the effect of return on asset, return on equity and return on investment on
dividend per share. The study adopted Ex-post factor research design. The population of
the study consist of the one hundred and thirty one |(131) oil and gas firms in Nigeria. The
sample size of this study consist of ten (10)firms selected from the population in which
only 10 years annual report was used ranging from 2012-2021. Fixed sample techniques
were used to select the sample size. The study revealed a significant relationship exist
between organizational performance on dividend payment and also amongst the variable
tested, return on investment is significant, return on asset is insignificant , while return on
equity is insignificant. The researcher therefore recommended that management of
Nigeria listed oil and gas companies spend enough time creating a dividend policy that
would improve the company performance and shareholder value.

Keywords: Dividend payment, Organizational Performance, Return on Asset, Return on Equity,

Return on Investment.
.
 TABLE OF CONTENTS

Title page i

Certification ii

Dedication iii

Acknowledgements iv

Abstract v

Table of Contents vi

CHAPTER ONE:

INTRODUCTION

1.1 Background information of the Study

1.2 Statement of the Problem 3

1.3 Objectives of the Study 3

1.4 Research Questions 4

1.5 Research Hypotheses 4

1.6 Scope of the Study 4

1.7 Significant of the Study 5

1.8 Limitations of the study 6

1.9 Operational Definition of Terms 7

1.10 Historical Background of the case study 8

CHAPTER TWO:

LITERATURE REVIEW

2.1 Conceptual Framework 15

32

2.2 Theoretical Review 28

2.3 Empirical Review 30

2.4 Conceptual Model of the Study 35

CHAPTER THREE:

METHODOLOGY

3.0 Introduction 36

3.1 Research Design 36

3.2 Population of the Study 36

3.3 Sample and Sampling Techniques 36

3.4 Method of Data Collection 37

3.5 Method of Data Analysis 37

3.6 Data Description and Model specification 37

CHAPTER FOUR:

RESULTS AND DISCUSSION

4.1 Presentation of Results 39

4.2 Interpretation of fixed Analysis 45

4.3 Discussion of Findings 48

CHAPTER FIVE:

CONCLUSION AND RECOMMENDATIONS

5.1 Summary of the Findings 49

5.2 Conclusion 50

5.3 Recommendations 51

REFERENCES

APPENDIX

.
 CHAPTER ONE

INTRODUCTION

1.1 Background Information to the Study

Oil and gas firms distribute their profits to their shareholders in the form of dividends. When a

corporation makes money, it has two options: it either give some of the money to shareholders or

reinvest the money back into the company. Although more shares of stock may be given in lieu

of cash, dividend payments are typically made in cash. Dividend payments in the oil and gas

sector are frequently influenced by both the company's financial success and the price of oil and

gas. When profits are exceptionally high, companies may decide to issue a special dividend in

addition to their regular dividend.

The board of directors of the corporation typically sets the dividend payout amount, which varies

from year to year. Determining whether to distribute profits as dividends or to keep certain gains

for internal corporate purposes may involve deciding whether to give out cash or shares.

According to Oliver and Ugah (2015), one of the most significant business decisions is whether

or not to pay a dividend because it is a basic expectation for shareholders.

The ability of a business to gradually raise dividend payments over time reveals how

management views the company's success and prospects for the future.While dividend reduction

raises investor uncertainty and raises the needed rate of return, current dividend payment reduces

investment to discount the firm earnings at a lower rate of return.

Consequently, the performance of an oil and gas company's organization is impacted by dividend

payments. There are several ways to look at organizational performance, and there are various

metrics that may be used to gauge a company's success. By assessing an organization's

organizational performance, management may see how its business strategy and objectives are

performing. in terms of money. Performance has been characterized in a variety of ways by

scholars:

In the oil and gas industry, organizational performance is the measure of how successfully a

company meets its goals and objectives. Organizational success in the oil and gas sector is

frequently assessed using financial indicators including revenue, net income, and return on

investment. However, other significant indicators, such safety record, environmental effect, and

community engagement, are also used to evaluate the performance of the company. For oil and

gas companies to stay profitable and competitive, they must sustain high levels of organizational

performance.

This can be accomplished by using efficient management techniques, making investments in

innovation and technology, and making a strong commitment to social responsibility,

environmental stewardship, and worker health and safety. Other key elements influencing

organizational performance in oil and gas companies are strong leadership, transparent

communication, and a continual improvement culture.

Oil and gas companies must also have the flexibility to adjust to shifting market conditions and

changing consumer demands in order to maintain maximum organizational performance. This

necessitates adopting a flexible and agile business operations strategy in addition to being open

to embracing new business models and technology. Oil and gas companies can reach their full

potential and long-term sustainable growth by concentrating on organizational performance.

1.2 Statement of the Problem

The unpredictability of commodity prices is one of the primary issues with dividend payments in

oil and gas firms. Since the price of gas and oil is volatile on the international market, businesses

in this sector may see large variations in their annual profits. They may find it challenging to

continue paying dividends consistently in the long run as a result.

A further difficulty in oil and gas businesses' dividend distributions is striking a balance between

the conflicting demands of capital expenditure and shareholder returns. Oil and gas businesses

may have to lower their dividend payouts in order to finance their considerable capital

expenditures that are needed to search for and develop new reserves. This may lead to conflict

between management, which may need to hold onto earnings in order to finance expansion plans,

and shareholders, who may wish to see larger dividend payouts.

1.3 Objectives of the study

The general objective of the study is to determine the effect of dividend payment on the

organizational performances of listed oil and gas firm In Nigeria. Other specific Objectives are

to:

i. Determine the effect of return on asset on dividend per share of listed oil and gas firm In

Nigeria.

ii. Ascertain the effect of return on equity on dividend per share of listed oil and gas firm In

Nigeria.

iii. Examine the effect of return on investment on dividend per share of listed oil and gas

firm In Nigeria.

1.4 Research Questions

 i. What is the effect of return on asset on dividend per share of listed oil and gas firm In

Nigeria?

ii. What is the effect of return on equity on dividend per share of listed oil and gas firm In

Nigeria?

iii. How does return on investment affect dividend per share of listed oil and gas firm In

Nigeria?

1.5 Research Hypothesis.

Hypothesis one

H0: Return on asset has no significant effect on dividend per share of listed oil and gas firm in

Nigeria.

Hypothesis two

H0: Return on equity has no significant effect on dividend per share of listed oil and gas firm In

Nigeria.

Hypothesis three

H0: Return on investment has no significant effect on dividend per share of listed oil and gas

firm In Nigeria

1.6 Justification/Significance of the Study

There are various reasons why the research on organizational performance and dividend

payments in Nigerian listed oil and gas firms is warranted.

First off, the oil and gas sector is a vital one for the Nigerian economy, contributing significantly

to both the GDP and government revenue of the nation. Therefore, legislators, investors, and
other stakeholders must grasp the elements that affect the financial performance of oil and gas

enterprises.

Second, dividend payments are a crucial indicator of an oil and gas company's financial health. A

major method for businesses to give value back to their shareholders is through dividends, which

may also have a big impact on stock prices and investor mood. Therefore, it's critical for

investors to comprehend the variables influencing oil and gas businesses' dividend distributions

in order to make well-informed capital allocation decisions.

Thirdly, the ability of oil and gas businesses to pay dividends is heavily dependent on

organizational success. Strong financial performance increases the likelihood that a company

will have the funds on hand to provide dividends to shareholders. Investors evaluating the

financial health of oil and gas firms should therefore comprehend the connection between

organizational performance and dividend payments.

All things considered, the research on organizational performance and dividend payments in

Nigerian listed oil and gas companies is warranted since it may offer insightful information on

the variables influencing the bottom line of businesses operating in this vital industry.

Policymakers can utilize the study's findings to support a more stable and sustainable oil and gas

industry in Nigeria. Investors can benefit from the study's clarity on the relationship between

organizational performance and dividend payments.

1.7 Scope of the Study

The Nigerian oil businesses registered on the Nigerian Stock Exchange (NSE) will be the study's

primary emphasis.

In order to give a thorough analysis of the relationship between organizational performance and

dividend payment of listed oil and gas firms in Nigeria, the study will span ten years, from 2012

to 2021.

The study will examine Nigerian oil firms' dividend payment policies and procedures, as well as

the variables that affect these decisions and the effects of dividend payments on listed businesses'

organizational performance.

The study would take into account the opinions of significant players in the Nigerian oil sector,

such as regulators, shareholders, management, and industry experts. The analysis only looks at

Nigerian oil businesses; it leaves out other areas of the country's economy.

1.8 Limitation of the study

There are a number of restrictions on the analysis of oil and gas companies' organizational

performance and dividend payments. A potential constraint of the research is its potential failure

to incorporate exogenous variables that impact the company's performance, such as

modifications in governmental regulations, economic circumstances, or technical breakthroughs.

Furthermore, it's possible that the study did not take into account how non-financial elements

like staff motivation, company culture, and leadership affect organizational success.

One potential constraint of the research is its potential lack of generalizability to other sectors or

nations. Businesses in the oil and gas sector face certain possibilities and problems that might not
be present in other sectors of the economy. Furthermore, the findings might not apply to

businesses that operate in other nations with distinct legal, economic, and cultural contexts.

1.9 Operational Definition of terms

Organizational Performance: Organizational performance in this study refers to how well an

oil and gas business in Nigeria performs overall in reaching its goals and objectives. This

comprises elements like market share, profitability, growth, productivity, efficiency, and other

KPIs.

Return on asset: A financial metric called return on assets (ROA) compares a company's net

income to its total assets to determine how profitable it is. A company's ability to pay dividends

may be impacted by how well it uses its assets to generate profits, which may be evaluated using

ROA.

Dividend Payment: The distribution of profits to shareholders of Nigerian oil and gas

businesses is referred to in this study as dividend payment. This covers dividends on stocks as

well as cash. Generally, the dividend payment amount is stated as a percentage of the net income

or earnings per share of the business.

Earning per share: Earning per share is used to calculate the amount of dividend a company can

pay to its shareholders. The higher the EPS, the more dividend a company can pay out.

Dividend yield: The annual dividend payment divided by the stock price at the time of payment

is known as dividend yield. It's a measurement of the amount of cash flow you receive for every

dollar you put in stock in a company.

Dividend per share: The amount of money a firm gives its shareholders for each share they own

is known as the dividend per share. It is computed by dividing the entire dividend amount by the

quantity of shares that are still outstanding.

1.10 Historical Background of The Study.

Chevron

The Chevron Corporation is a global energy company with its headquarters located in San

Ramon, California in the United States. P.L. Pratt and E.L. Doheny established the business in

1879 under the name Pacific Coast Oil Company. In 1900, it amalgamated with Standard Oil to

become Standard Oil Company of California (Socal). In 1984, Socal evolved into Chevron

Corporation. In the oil and gas sector, Chevron has a lengthy and illustrious history. Early on in

the company's history, it experienced tremendous development and expansion as it acquired

numerous oil fields and refineries across California and other US states. Chevron supplied the

Allied armies with fuel and lubricants during World War II, which was a crucial contribution to

the war effort. Currently employing over 48,000 people, Chevron is among the biggest oil firms

in the world, operating in over 180 countries. The business engages in activities across the whole

energy value chain, from production and refining to marketing and exploration.

Mrs Oil Nigeria Plc

Nigerian oil and gas firm MRS Oil Nigeria PLC was established in 1995. Formerly known as

Texaco Nigeria Limited, the business was purchased by MRS Holdings Limited in 2006 and

changed its name to MRS Oil Nigeria PLC.

In the oil and gas sector in Nigeria, MRS Oil Nigeria PLC has a lengthy and illustrious history.

For more than 25 years, the company has been engaged in the importing, warehousing,
marketing, and distribution of petroleum products in Nigeria. MRS Oil Nigeria PLC is one of

Nigeria's biggest providers of petroleum products, with a network of depots, storage facilities,

and retail locations around the country.Currently, MRS Oil Nigeria PLC holds a prominent

position in the Nigerian oil and gas sector. MRS Oil Nigeria Plc engages in both oil and gas

exploration and production in addition to its downstream activities. The company is aggressively

looking for additional reserves and has interests in a number of Nigerian oil and gas sites. With

more than 1,000 workers, MRS Oil Nigeria Plc is a publicly traded firm on the Nigerian Stock

Exchange today. As part of its commitment to social responsibility and sustainable development,

the company has established a number of initiatives to promote environmental preservation,

health, and education in the areas in which it works.

Conoil Plc

Conoil plc, originally known as Consolidated Oil Nigeria Limited, was established by Mike

Adenuga and went public in 1984.Crude oil production, sales, and exploration are the company's

main business endeavors. Conoil Producing now owns a number of oil blocks, including OMLs

103, 136, and OPLs 290 and 257, which were purchased through competitive bidding processes

conducted by the Nigerian Federal Government. an integrated oil and gas business operating

under multiple licenses in the Niger Delta and employing a large number of people. The top

independent oil and gas exploration and production company in Nigeria is Conoil plc. firmly

established as the independent oil and gas firms' flagship in West Africa.

the principal shareholder in one of the top businesses in Nigeria that markets refined

products.began and completed its first pipeline and pre-drill site study in 1991, little than a

month after block Oil Prospecting License (OPL) 113 (now OML 103) was awarded.
Within two weeks after finding the well, the Bella structure in OPL 113 was remapped, and two

consecutive appraisal wells were suggested for drilling.

NNPC

Nigeria's national oil business is called the Nigerian National Petroleum Corporation (NNPC).

The Federal Ministry of Mines and Power and the Nigerian National Oil Corporation merged to

form the corporation in 1977. In Nigeria, the NNPC is in charge of petroleum product

distribution, production, refining, and exploration.

The discovery of oil in Nigeria at the beginning of the 20th century is whence the NNPC got its

start. At Oloibiri, in what is now Bayelsa State, the Shell-BP venture discovered oil in

commercial quantities in 1956. The oil business in Nigeria began with this discovery.

The Nigerian National Oil Corporation (NNOC) was founded by the Nigerian government in

1971 to manage the nation's oil industry following the discovery of oil. Later, in 1977, the

Federal Ministry of Mines and Power and the NNOC combined to become the Nigerian National

Petroleum Corporation (NNPC).Over the years, the Nigerian oil industry has developed

significantly with the support of the NNPC.

Mobil Exxon Mobil

Moving Exxon Corporation and Mobil Corporation merged to establish the worldwide oil and

gas corporation Exxon in 1999. The corporation is among the biggest publicly traded companies

in the world, with its headquarters located in Irving, Texas.

Originally known as the Standard Oil Company of New Jersey, Exxon Corporation was

established in 1882. The business was a significant participant in the exploration, extraction,
refinement, and distribution of petroleum products. Exxon Corporation expanded over time to

rank among the biggest oil corporations in the world, operating in more than 200 nations.By

contrast, the Standard Oil Company of New York was established in 1911 and later renamed as

Mobil Corporation. Mobil engaged in the exploration, extraction, refinement, and marketing of

petroleum products, just like Exxon Corporation. Mobil was a significant manufacturer of

chemicals like polyethylene and polypropylene and had interests in the chemical sector.

ExxonMobil Corporation was created in 1999 by the merger of Exxon Corporation and Mobil

Corporation. With activities in more than 200 countries, the combined company is now among

the biggest oil and gas firms worldwide. The new business engaged in all facets of the oil and

gas sector, including petroleum product production, marketing, refining, and exploration..

Seplat Energy

Seplat Energy is an indigenous oil and gas production and exploration business based in Nigeria.

The company's headquarters are in Lagos, Nigeria, where it was founded in 2009.

Platform Petroleum Joint Ventures Limited and Shebah Petroleum Development Company

Limited, two Nigerian businesses, partnered to become Seplat Energy. The corporation was

founded with the intention of utilizing Nigeria's gas and oil resources and advancing the

country's economic progress. The Niger Delta, one of Nigeria's most active oil and gas producing

regions, is the focal point of Seplat Energy's operations. The business is engaged in the region's

oil and gas production, development, and exploration.

.
Shell Nigeria

One of the biggest oil and gas businesses in the world, Royal Dutch Shell, has a Nigerian

subsidiary called Shell Nigeria. The corporation is one of the biggest names in Nigeria's oil and

gas sector and has been doing business there for more than 60 years.

Shell Nigeria's history started when the corporation started looking for oil in Nigeria in the early

1900s. Since its official founding in 1956, Shell Nigeria has been engaged in the exploration,

extraction, processing, and distribution of oil and gas within Nigeria.

Oando Plc

Exploration, production, and sale of oil and gas are the activities of the multinational energy

corporation Oando PLC, based in Nigeria. Originally founded in 1956 as a petroleum marketing

firm, the corporation has expanded to rank among Africa's biggest energy companies. The

upstream, middle, and downstream sectors of Nigeria's oil and gas industry are the main areas of

operation for Oando PLC. The business is engaged in the extraction, refining, marketing, and

distribution of petroleum products in addition to the exploration and production of gas and oil.

Oando PLC has participated in numerous large-scale oil and gas projects in Nigeria and has

contributed significantly to the country's economy throughout the years. In Nigeria, the

corporation has also taken part in a number of social and community development initiatives,

such as those that deal with healthcare, education, and infrastructure improvement.Oando PLC

has extended its operations outside Nigeria to include Ghana, Togo, and the Republic of Congo,

among other African nations. The company has put in place a number of programs and efforts to

make sure that its operations are in line with worldwide best practices since it is dedicated to

conducting business in a safe, effective, and ecologically friendly manner.

Total Nigeria Energies

The French multinational oil and gas corporation Total Energies is the parent company of Total

Nigeria Energies. Since its founding in 1956, Total Nigeria Energies has developed into one of

the leading companies in the country's oil and gas sector. The corporation works in Nigeria to

explore, produce, refine, and market natural gas and oil. In addition to working in the oil and gas

industry's upstream, midstream, and downstream areas in Nigeria, Total Nigeria Energies also

imports and sells petroleum products. Total Nigeria Energies has participated in numerous large-

scale oil and gas projects in Nigeria and has contributed significantly to the nation's economy

over the years. The business has additionally contributed to a number of social and community

development initiatives in Nigeria, such as the provision of infrastructure, healthcare, and

education.

Capital Oil Plc

Ifeanyi Ubah established Capital Oil Plc, a Nigerian petroleum products marketing company, in

2001. The company imports, stores, distributes, and markets petroleum products, including

gasoline, diesel, kerosene, and aviation fuel. Its headquarters are located in Lagos, Nigeria.

Capable of holding more than 200 million liters of petroleum products, Capital Oil Plc is the

operator of one of Nigeria's biggest petroleum product storage facilities. The business offers its

goods directly to customers through a network of more than 50 retail locations around Nigeria.

Capital Oil Plc has received praise for its economic contributions to Nigeria over the years and

has been honored with multiple accolades for its ethical business conduct and CSR endeavors. In

Nigeria, the corporation has also taken part in a number of social and community development

initiatives, such as those that deal with healthcare, education, and infrastructure improvement.

But over time, Capital Oil Plc has also had difficulties. The Nigerian National Petroleum
Corporation (NNPC) accused the corporation in 2012 of having over $100 million in outstanding

debts. This resulted in a contentious disagreement between the two businesses, which was

ultimately settled in 2017. Notwithstanding these difficulties, Capital Oil Plc is still a key force

in the Nigerian petroleum products marketing sector and contributes significantly to the country's

GDP. The firm is dedicated to collaborating with stakeholders and local communities in Nigeria

to advance sustainable development and ethical business practices.

 CHAPTER TWO

2.0. LITERATURE REVIEW

2.1. Conceptual Framework

2.1.1. Concept of Dividend payment

According to ICAN (2009) and Ross, Westerfield & Jaffe (2010), dividend payments are

disbursed to equity holders as compensation for the time and investment risks they have

undertaken. These payments may take the form of cash dividends, stock dividends, or scrip

issues. One of the four decision-making domains in finance is the allocation of profits or

dividends. One of the most important financial issues that is still up for debate worldwide is

whether or not to distribute dividends to shareholders (Owuigbe, Jafaru & Ajayi, 2012; Osegbue,

Ifurueze & Ifurueze, 2014 and Velnampy, Nimalthasan & Kalaiarasi, 2014). In a similar vein,

Yegon, Cheruiyot, and Sang (2014) assert that one of the trickiest and most contentious topics in

finance is dividend payout. According to Bannock (1998), a dividend can be stated as an

absolute sum per share or as a percentage of a share's nominal value. The dividend policy is a

trade-off between retained earnings and paying out cash as well as issuing new shares, according

to Richard and Stewart (2003), who also mentioned the direct compensation and servicing of

share capital involved in dividend paid to shareholders. In the absence of cash, a bonus share or

scrip issue is awarded. According to Chandra (2002), the dividend policy establishes how much

of earnings are distributed as dividends to shareholders and how much is reinvested in the

company for future use. According to Lasher (2000), a company's dividend policy is the

justification used to decide how much dividends to pay out. It includes the total amount paid as

well as the pattern that determines how much varies over time. Put another way, it involves
finding a balance between the company's current dividend payments to shareholders and its

future growth. According to the study's interpretation, dividend policy refers to the choice made

by participants in the dividend decision-making process regarding the proportion that will be set

aside for transactional, speculative, or precautionary reasons and the amount that will be

distributed to shareholders as returns on their equity investment at the appropriate time and date.

A high dividend payout indicates a decrease in the amount of money the corporation is putting

back into the company. Companies with high dividend yields typically draw investors who value

the certainty of a consistent income stream over a strong potential for share price rise, according

to Khan et al. (2019). Conversely, businesses that pay out little dividends are investing their

profits back into expanding their businesses, which will increase investors' future capital gains.

The ability of a company to pay dividends, when those dividends are paid, and how those

dividends are distributed to shareholders are thought to be indicators of that company's

performance. The profit from the current year and, most of the time, general reserves are used to

pay dividends. Cash dividends are a type of dividend payment that is typically made in cash.

A company's dividend payments may give prospective investors or shareholders hope for the

company's future expansion, which may raise share values. Dividend payments can serve as an

indicator of financial performance, as demonstrated by the table below. Dividend payments can

be a tactic employed by management to restrict the amount of free money available.

Additionally, he stated that managers will unavoidably need to borrow money from outside

sources as a result of dividend payments. Investor monitoring costs will be minimal in such a

scenario as fund providers, such as bankers and financial analysts, will be keeping an eye on the

managers. However, the author stated that dividends might lead to management making
decisions like increasing debt financing, which could enhance the firm's insecurity, and they

might also increase the scrutiny of management by outside parties. (1996, Jensen)

2.1.2 Determinant of dividend payment

Limitations on dividend payments and policies Most businesses are aware that the majority of

shareholders want dividend payments. However, company‟s decision regarding what to pay as

dividend depends on a number of factors. These elements are those that Akinsulire (2006)

suggested are;

1. Legal: According to company law, dividends can only be paid from distributable profits,

which are defined as revenue reserves, profits from the use of company property, even if it is a

wasting asset, and realized profits on the sale of fixed assets. In the case of multiple asset sales,

the realized profit on the sold assets is calculated using standard accounting principles.

Dividends cannot be paid out of capital (Sections 379–382 of CAMA).

2. Government regulation: The government limits the amount of dividends that can be paid to

shareholders by capping dividend payments at a specific portion of profit after taxes. Dividend

payments, however, have been deregulated since 1988.

3. Statutory requirement: A certain amount of a company's profit before tax (PBT) or profit

after tax (PAT) must be transferred to statutory reserves, according to regulations. For instance,

insurance providers; 10% of PBT or 1% of the entire premium is charged for life; 20% of PBT or

3% of the complete premium is charged for nonlife. Banks: 10% of PBT goes into the SME

reserve; if the statutory reserve is less than the minimum paid up capital, the bank will forfeit

30% of PAT; otherwise, it will forfeit 15% of PAT.

4. Liquidity: A corporation that lacks the necessary cash on hand will not be able to pay a

dividend, regardless of other factors. But occasionally, it might borrow money for this purpose—

for instance, through a bank overdraft.

5. Share valuation: Investors now favor a company whose dividends are essentially constant

over time in the stock market. A gentle upward movement is to be desired but violent

fluctuations in either direction are not. These elements frequently prompt many businesses to

implement extremely cautious payout policies.

6. Internal re-investment opportunities: In situations where obtaining external financing is

either unattainable or requires substantial transaction expenses, paying dividends could entail

passing up valuable investment prospects. Restrictions on dividend may be necessary to finance

these kinds of investments.

7. Access to capital market: If a business is not liquid enough to cover its dividend, it may be

able to raise additional debt or stock from the capital market. A company's ability to pay

dividends increases with its access to the capital market.

2.1.3 Dividend paying methods

1. Residual method: Here, dividends are disbursed only following the satisfaction of the

company's capital requirements. Businesses that employ the residual dividend policy approach

have decided to finance any new initiatives only with internally produced equity. These

businesses typically try to keep their debt-to-equity ratio balanced before paying out dividends,

indicating that they only choose to pay out dividends when there is still money left over after all

operating and expansion needs are satisfied.

 2. Stable method: The majority of corporations' shareholders view dividend stability or

regulation as a desirable policy. The stability offered by the stable dividend policy approach

contrasts sharply with the dividend variation generated by the residual policy. The market value

of a company's shares increases when dividends are stable. A lot of financial managers work

hard to keep dividend policy consistent. If a company's management is unsure that it will be able

to sustain the dividend growth over time, they will not raise it.

3. Hybrid method: The residual and stable dividend policy techniques are combined in this. In

this instance, the business aims to see the debt/equity ratio as a long-term objective as opposed to

a short-term one. Today's businesses use the hybrid approach more frequently. In this case,

corporations will typically have a single fixed dividend that is readily managed and set as a

relatively small percentage of annual income. Additionally, these businesses will pay additional

dividends only in cases where income above standard thresholds.

2.1.4 Types of Dividends

Nwude (2003) identified five types of dividend to include.

a. Cash dividend: This combines the techniques of stable dividend policy and residual dividend

policy. In this instance, the business aims to see the debt/equity ratio as a long-term objective as

opposed to a short-term one. Businesses nowadays are using the hybrid method more often. In

this scenario, firms usually have one easily controlled fixed dividend, which is set at a

comparatively low percentage of annual income. Furthermore, these companies will only

increase dividends in situations where revenue exceeds predetermined levels...

b. Stock dividend or bonus issue: In order to pay the dividend, extra shares must be issued to

the equity stockholders. It entails raising the number of equity shares and capitalizing the
company's reserves. The benefit of a stock dividend is that it keeps the company's cash on hand

because no money is taken out. The dividend is paid to the shareholders, who have the option to

convert it into cash at any time by selling their shares. Each shareholder receives a stock

dividend in proportion to their current ownership stake in the business.

c. Stock or share split: This means that rather than decreasing the pair value, more shares will

already exist. In order to encourage more trading activity on the shares on the stock exchange,

management utilizes share splitting to lower the price of its shares.

d. Reverse stock split: A reverse stock split is a financial strategy of consolidating the nominal

value of an existing share issue and a corresponding decree in the number of shares in existence.

e. Stock repurchase: This is the purchase of a corporation's outstanding shares for stock

treasury storage by the company itself. Repurchasing stock may be done with the intention of

lowering the number of existing shares in order to boost the EPS of the shares that remain, which

will raise their market value.

f. Property dividend: Distributing actual items or property, such machinery, real land, or other

assets, to shareholders is what these dividends entail. As dividends, owners receive tangible

assets rather than money or stock. A property dividend is a type of dividend distribution where

shareholders get non-cash assets rather than cash. This may seem like a good option for

companies that aren't profitable or have extra assets they don't need.

g. Special dividend: An extra dividend payment made by the company above and beyond its

regular dividend disbursements is known as a special dividend. It is usually made after a

successful fiscal year or when the company has additional cash on hand. A special dividend is an

additional type of dividend paid by a firm in addition to its regular dividend payments.
2.1.5 Impact of Dividend Payment.

Dividend payments can have a big impact on a company's operations and shareholders' interests.

Dividend payments have the potential to both draw in and keep investors while also indicating to

the market the company's strength and stability financially. However, these payments may

exhaust the business's cash on hand, making it more difficult for it to take on unforeseen

difficulties or invest in chances for growth.

Dividends are a dependable source of income for stockholders, especially for retirees or those

who prefer consistent income to capital growth. Furthermore, dividends can assist counteract

stock price losses so that investors can continue to get paid even in the event that the value of

their stocks declines.

Investors need to be aware that dividend payments are subject to fluctuate and may even be

eliminated if the company's financial circumstances alter. The impact of these payments is

contingent upon various circumstances, including the financial health of the company, its

prospects going forward, and the inclinations of its shareholders. Before making any investment

decisions, investors should thoroughly investigate and evaluate a company's dividend history and

financials.

2.1.6 Concept of Organizational Performance

The ability of a business to make money, pay its debts, and maintain a stable cash flow is

referred to as organizational performance (Mohammed & Rugami, 2019). A corporation that is

in good financial standing can achieve its goals and efficiently manage its financial risks. It

entails calculating the financial results of a business's operations and policies. This metric can be

used to compare similar businesses in the same industry or various industries, and it is used to
evaluate a company's overall financial health over a given time period (Verma, 2020). Return on

assets is the financial performance variable employed in this study.

2.1.7 Return on Assets

The Return on Assets (ROA) measure is frequently employed to evaluate the profitability and

asset utilization efficiency of a business. A higher return on assets (ROA) suggests that the

business is more efficient in turning assets into profits. Divide the net profit before taxes by the

total amount of assets to get ROA. Micah, Ofurum, and Ihendinihu (2012) assert that ROA offers

important information about a company's capacity to make money from its assets. It shows the

percentage of net income to all assets that are available for use. Larger asset counts are typically

associated with increased income generation for businesses. ROA gauges how well a business is

able to maximize the returns on its assets and resources.

2.1.8 Return on Equity

Rentability of Own Capital is a common translation for return on equity (ROE), also known as

return on common equity. This profitability ratio, or the portion of total profitability that can be

distributed to shareholders, will draw investors to purchase shares. Shareholders are known to

have a residual claim on profits earned. The company's profit will be distributed to shareholders

if any remains after first being used to settle any debt interest. The profitability ratio used to

assess a company's capacity to turn a profit based on its share capital is called return on equity,

or ROE. One way to calculate return on equity (ROE) is to divide total equity by net income

after taxes.
2.1.9 Return on Capital Employed

A financial ratio called return on capital employed compares the profitability of an organization

to the amount of capital that is used to run its operations. Put simply, it's an indicator of how well

the business uses its money to produce profits. It is a helpful metric that sheds light on how

efficiently a business operates and is computed by dividing net operating profit by total capital

utilized. A greater return on capital employed suggests that the business is operating more

efficiently since it is making more money with the same amount of capital. A reduced return on

capital employed may be a sign of inefficient capital use by the business. It is also possible to

compare businesses in the same sector or industry using return on capital employed.

2.1.9. How Does Dividend Payment Affect Organizational Performance?

Paying dividends may lower the amount of money available for the business to reinvest, which

may restrict its ability to grow and impair its long-term success. Indeed, the payment of

dividends can impact a business's financial standing. A company's available capital for investing

in the firm is decreased when it distributes dividends to its shareholders. Long-term performance

may suffer as a result, and growth prospects may be restricted. As such, corporations must

carefully weigh the demands of investors against the organization's long-term financial viability

when determining its dividend policies. By paying dividends, a company can reassure investors

about its financial stability and promising future prospects. This may draw in new funding

sources and support preserving investor trust. A corporation may be compromising long-term

growth for short-term profits, though, if it pays out excessive dividends, which could eventually

hurt investor confidence.

Repurchases of shares, which are financed by dividend payments, can increase the value of

shares that already exist by reducing the total number of shares that are in circulation. Enhancing

earnings per share and possibly increasing the stock price are two ways that such a move can

help shareholders. However, it is imperative for companies to thoroughly assess the effects of

share buybacks on their financial standing and prospects for future growth.

2.1.10 Dividend per Share (DPS)

Dividend per share was defined by Igben (2009) as the ratio that displays the gross dividend

declared on each ordinary share issued and ranks the dividends paid out over the course of the

year. Hence, dividend per share is a measurement of the amount that each outstanding common

share will receive. It is calculated by dividing the gross dividend (interim + final) by the total

number of ordinary shares in the dividend-ranking issue and then multiplying the result by 100.

This represents the total dividends declared on each common share that has been issued. The

total dividends paid out for a full year (including interim dividends but excluding special

dividends) divided by the total number of outstanding ordinary shares issued is known as the

dividend per share, or DPS. Dividend per share is the total amount of dividends paid by a

publicly traded corporation on each share of common stock it has issued during the reporting

period. Those who are comparing stocks to buy and would rather invest in companies that pay

dividends can use DPS.

2.1.11 Factors That Influence Company Decision To Pay Dividends To Its Shareholders.

 Internal factors: This includes the company's capacity for expansion, cash flow,

profitability, and overall financial health. A corporation is more likely to distribute

dividends to its shareholders if it is in good financial standing, consistently profitable,

and has steady cash flows. On the other hand, a business that is having trouble making

ends meet, has negative cash flows, or is losing money can decide not to pay dividends at

all. Additionally, the profitability of the organization is a key consideration in this

decision-making process. A corporation usually evaluates its capacity to produce steady

earnings prior to disbursing dividend payments. A company that has a history of strong

and consistent earnings is more likely to distribute dividends to its owners. Another

essential internal factor is cash flow. A business needs sufficient financial reserves to

cover its liabilities before it can pay dividends. One important measure of a company's

capacity to pay out its dividends is positive cash flow.

 Businesses frequently debate whether to pay dividends or keep their earnings in order to

reinvest them back into the company. While established businesses with less room for

growth might choose to pay dividends to shareholders in order to fund expansion, high-

growth businesses might be more inclined to retain staff in order to finance growth.

Another important factor to consider is debt commitments. Businesses may have to

prioritize paying dividends above servicing their debt, particularly long-term debt.

Excessive debt can limit a company's ability to distribute dividends. Investments in new

buildings or equipment, for example, can have an impact on dividend decisions. In

certain instances, these expenditures supersede dividends in order to preserve the

competitiveness and long-term expansion of the business.

 Solvency and liquidity are crucial factors. The payment of dividends must not to

undermine the company's overall financial stability or impair its capacity to fulfill its

immediate obligations. Decisions about dividends are largely made by the board of

directors. Dividend payments are determined in large part by their evaluation of the

company's internal financial health, outlook, and goals. Dividend decisions can also be

influenced by tax considerations. Businesses that want to reduce the tax burden on

dividends can choose for other strategies like share buybacks as a means of providing

value to their shareholders. Another consideration is the company's competitive position

within its industry. Dividend payments can help a business draw in investors and improve

its standing, which could give it a competitive edge. Furthermore, the makeup of the

shareholder base is important. Businesses with a large percentage of income-seeking

investors can be under more pressure to pay dividends, whilst businesses with a larger

focus on growth might choose to keep their retained earnings.

 External factors: The state of the market, the legal framework, and investor expectations

can all have an impact on dividend payments. A business in a fiercely competitive

industry, for instance, could have to hold onto more of its earnings for potential

development and expansion, which would mean a reduced dividend payout ratio or no

dividend payment at all. In a similar vein, modifications to tax legislation or rules may

impact a company's capacity to distribute dividends. Another significant external element

that may have an impact on a company's dividend payment choice is investor

expectations. A corporation may need to maintain a high dividend payout ratio in order to

fulfill investor expectations if the company pays a large dividend. On the other hand, if

investors are more concerned with the firm's ability to expand, the company could have
to keep a larger portion of its earnings in order to reinvest them back into the company,

which would mean a smaller dividend payout ratio or no dividend payment at all. In

general, internal and external elements that may have an impact on a company's dividend

policy should be taken into account in the conceptual framework on dividend payment.

As a result, analysts and investors will be better able to comprehend the variables that

influence a company's dividend payment choices and base their own investment decisions

accordingly. The status of the economy is among the external elements that has the most

influence. Businesses are more inclined to think about paying dividends during times of

economic expansion and stability. Businesses often produce substantial profits and cash

flows in a thriving economy, giving them the ability to pay out a percentage of their

earnings to shareholders. Conversely, in order to maintain their financial stability,

businesses may become more cautious during economic downturns and uncertainty and

place a higher priority on holding onto their earnings. Additionally, the market as a whole

and investor expectations have a big impact on dividend choices. Businesses strive to

either reach or surpass these standards. In the event that the market is dominated by

income-seeking investors, businesses can feel pressured to pay dividends in order to draw

in and maintain this group of shareholders. On the other hand, corporations can decide to

reinvest earnings to finance development and innovation in line with market trends if

investors place a higher priority on capital appreciation and growth. Dividend decisions

are directly influenced by tax laws and government regulations. The way that businesses

arrange their distributions may be impacted by the tax status of dividends. As a result,

businesses may decide to use different strategies to maximize the tax efficiency of

distributions, including share buybacks, in order to restore value to shareholders. Another

 important external issue is the competitive environment. Businesses keep a careful eye on

their peers and rivals. Maintaining competitiveness and appealing to income-focused

investors can impact dividend payments, particularly when competitors in the same sector

have comparable dividend policies. International economic conditions can have an

impact on dividend policy in a multinational company environment. Businesses that

operate internationally need to take into account how the state of the economy in various

areas may affect their capacity to distribute dividends. Currency exchange rates notably

affect multinational firms. Exchange rate fluctuations may have an impact on foreign

shareholders' dividend payments, which may have an impact on their decision to keep

earnings or pay dividends.

2.2. Theoretical Framework

2.2.1. Agency Theory

According to agency theory, managers and shareholders' agency problem influences judgments

on dividend policy. While shareholders may desire to receive dividends in order to get a return

on their investment, managers may prefer to keep their revenues for personal use or to finance

side ventures. The agency theory sheds light on the trade-off between paying dividends to

shareholders to appease them and keeping revenues for future investment possibilities. The

beginnings of agency theory intellectually Scholars from a variety of fields have applied agency

theory, which has its roots in economics. These fields include accounting (Reichelstein, 1992),

family business (Tsai, Hung, Kuo, & Kuo, 2006), marketing (Bergen, Dutta, & Walker, 1992),

organizational behavior (Eisenhardt, 1985), law (Lan & Heracleous, 2010), and marketing

(Bergen, Dutta, & Walker, 1992). Generally, agency theory is viewed through the prism of either

the governance mechanisms (positivist research) or the principal-agent dilemma (principal-agent

research). Fundamentally, agency theory is based on an economic theory of risk sharing

(Eisenhardt, 1989), wherein two parties—principals and agents—share risks, but they may

approach problems in various ways (Jensen & Meckling, 1976). Concerning the principle's

willingness to share risk is the fact that the main has given the agent certain duties to fulfill in

order to accomplish similar objectives. It is anticipated that this cooperative behavior would

provide the results that the principle has indicated (Barnard, 1938). But the fundamental issue

with agency is that self-interested behavior might lead an overzealous agent to work against the

principal's best interests (Burnham, 1941). The main views this disparity as problematic, as it

alters the agency costs (Fama, 1980). The agency charges are transparent to the principal at the

beginning of the principal-agent relationship. Nevertheless, the principal feels as though more

risk has been taken when the agent acts outside the terms of the agreement. Thus, the first agency

issue—that is, changes in risk sharing—appears.

2.2.2 Signaling Theory

According to Modigliani and Miller's (1961) hypothesis, dividends could have a signaling

impact. This theory's proponents assert that dividends have a signaling effect and help investors

or future investors predict the company's earnings, which is really impacted by the dividend rate.

Businesses must pay dividends to their shareholders, and large dividend payments are viewed by

shareholders as an indication of a profitable business. Dividend payments have a signaling

impact since they provide the market with information about the firm. An increase in dividend

payments is a positive indicator for the company as it enhances customer perception of the

company and its goodwill, which in turn drives up share price. Investors, shareholders, and

potential investors make predictions about the company's profitability based on dividend

announcements
2.2.3 Dividend Relevance Theory

It was Walter who first proposed the dividend relevance idea (1963). He maintained that the

firm's worth is nearly always impacted by the dividend policies chosen. His model demonstrates

the significance of the link between the cost of capital and the firm's rate of return in figuring out

the dividend policy that will optimize shareholder value. The following presumptions form the

foundation of Walter's model: First, no new equity or debt is issued by the company; instead, all

investments are financed through retained earnings. Second, the cost of capital and the firm's rate

of return are fixed. Thirdly, any profits are promptly reinvested inside the company or paid out as

dividends. Fourth, the dividend and earnings per share are still the same. And lastly, the

company will always exist. This model is thought to be highly helpful in illustrating how

dividend policy affects an all-equity company under various rate of return assumptions. Though

valid for Walter's model, the model's simplicity might result in findings that are not true for other

models.

2.3 Empirical Review

Topal (2014) examined the connection between the financial results of the firms listed on the

Istanbul Stock Exchange and their dividend policies. Data from 172 non-financial firms were

utilized in the study between 2008 and 2011. A multiple regression analysis was performed on

the data. The analysis's findings demonstrated that dividend distributions affected businesses'

operations. Additionally, there was a statistically insignificant correlation between the dividend

per share rate and accounting-based performance indicators (ROA & ROE), but a positive and

statistically significant correlation between the dividend per share rate within groups and market-

based performance indicators (Tobin's q). The study came to the conclusion that companies'

dividend policies have an impact on how well they perform.

The link between dividend policy and firm performance of listed manufacturing businesses in Sri

Lanka was investigated by Velnampy, Nimalthasan, and Kalaiarasi (2014). a group of industrial

businesses that were listed between 2008 and 2012. The results of the regression analysis

indicated that profits per share and dividend distribution were negligible. The study came to the

conclusion that Sri Lankan business performance is unaffected by dividend policy.

Using trade-off theory and signaling theory, Subba (2003) investigated the dividend payment

patterns of listed companies on the National Stock Exchange (NSE) and Bombay Stock

Exchange (BSE) between 1990 and 2001. According to the study's findings, the percentage of

firms that paid dividends decreased from 60.5% in 1990 to 32.1% in 2001. The research

indicates that there was an upward trend in dividend payments until 1995, at which point things

started to go wrong to the point that the percentage of companies that never paid a dividend

reached over 50% across the studied years.

Tiriongo (2004) conducted an analysis of the dividend payment trends of 49 businesses listed on

the Nairobi Stock Exchange (NSE) over a ten-year period, from 1993 to 2002. The trend analysis

revealed that all enterprises' combined dividend payout ratios were in a falling position. On the

other hand, the dividend payment ratio trend in the commercial, industrial, and agricultural

sectors is consistent when examined on an individual sector basis. The financial industry is

characterized by a substantial decline in the dividend payout ratio, which can be linked to the

unsatisfactory performance and financial difficulties experienced by the majority of Kenya's

commercial banks in the latter part of 2002.

In the research paper "The 2011 Guide to Dividend policy Trend and Best Practices," Morgan

(2011) noted that different industries had different dividend payment percentages. The study

found that companies with low capital bases are known to be reticent to pay dividends, whereas

companies with average capital bases only pay out 14% of their profits as dividends, and

companies with big capital bases pay out 23% of their profits as dividends.

Examining seventeen thousand, one hundred and six enterprises worldwide, Fatemi and Bildik

(2012) tracked the dividend distribution patterns in thirty-three nations. The research, which

examined the years 1985 through 2006, found that the dividend distribution had dropped

significantly from 87% to 53%.

Following the country's split-share structure reform, Rulu (2015) examined the dividend

payment patterns of 1,275 non-financial companies listed on the Chinese Stock Exchange for the

years 2003–2011. It was discovered that the new policy caused a significant decline in the

average cash dividend distribution by the corporations, particularly those with greater rates of

liquidity and growth.

In a related study, Atia (2016) found that the number of dividend-paying companies in the UK

increased over time, from 427 in 1991 to 669 in 1995. However, from 1996 to 2001, there were

only 365 dividend-paying companies; this was a declining condition, and between 2008 and

2009, there was another severe decline due to the global financial crisis. The year 2003 marked

the peak of this fall in the number of dividend-paying companies, and by 2014, there were just
225 remaining. The aforementioned circumstances supported the amount that these corporations

paid as dividends during the study's consideration periods.

Additionally, fresh data regarding the existence of a significant decline in dividend payments by

Nigerian corporations was presented by Abdulkadir, Abdullah, and Wong (2016). A ten-year

(2003-2012) analysis of a sample of 176 firms revealed a decrease trend in the cash dividend

paid throughout the years, as well as a drop in the number of companies that paid dividends.

According to Cristea and Cristea (2017), when the dividend policy patterns of Romanian firms

from 2007 to 2016 were examined, it was found that, in contrast to past years, there was an

increasing tendency among the companies sampled during the global economic downturn. On

the other hand, a characteristic of non-financial companies listed on the Romanian stock

exchange is their crisscrossing dividend distribution patterns.

Olayiwola (2019) looked studied the trajectory and pattern of corporate dividend distribution of

chosen listed businesses for the years 2001 to 2016 as part of his research on dividend policy,

firms’ investment behavior, and value of selected quoted companies in Nigeria. The study used

text analysis in conjunction with statistical tools like graphs and percentages to show the

dividend payments' corresponding behavior across the relevant time periods. It was found that

the dividend distribution of Nigerian listed businesses was declining at an accelerating rate. The

dividend trend showed a 7.9% growth in 2001 and a -5% decrease in 2016.
Haque (2019) examined the patterns of dividend payments made by Bangladeshi business

entities during a fourteen-year period. 92 non-financial listed businesses were included in the

analysis, which employed multiple dividend growth metrics. The results showed that businesses

who implemented a cash dividend policy were able to increase the value of their shares.

The extent of the linkages between dividend payments and business performance in the Nigerian

banking sector between 1990 and 2010 is examined by Osegbu et al. (2014). Regression models

are used to show that there is no meaningful correlation between performance and dividend

policy. It's interesting to note that the four other explanatory variables—free cash flow, financial

leverage, business risk, and tax paid on dividend payment ratio—do not significantly correlate

with dividend policy.

In order to determine the correlation between a company's dividend policy and its profitability,

Charles et al. (2014) undertook a research. The study's data were taken from the 2013 annual

report and accounts, nine manufacturing firms chosen from the Nairobi Stock Exchange of

Kenya, and further empirical research. Research has revealed a noteworthy positive correlation

between an organization's dividend policy and its profitability, investments, and profits per share

as a corporate entity. They demonstrated the importance of dividend policies for businesses in

raising investment and profitability in Kenya's manufacturing industry.

The influence of dividend distribution on corporate profitability in manufacturing companies

listed on the Colombo Stock Exchange in Sri Lanka was investigated by Fathima et al. (2014).

The 21 manufacturing businesses' annual reports from 2007 to 2011 were the source of the data
used for this purpose. The link between dividend payout and business profitability is examined

and estimated using regression models. To get a significant conclusion about the effect of

dividend policy on business profitability, the study also used a subsample. The study's findings

demonstrated a strong correlation between dividend payments and business performance as

measured by return on equity, return on assets, and profits per share. For the whole sample, there

is a strong positive association between dividend payout and return on equity and return on

assets, whereas for the dividend paying sample, there is a large negative link between dividend

payment and profits per share.

Ifuero et al. (2016) used data from seventeen (17) manufacturing businesses registered on the

Nigerian stock exchange to evaluate the impact of dividend policy on company returns. They did

this by utilizing panel regression, which uses fixed effect regression, descriptive statistics, and

correlation analysis. The results show that the present dividend payout, company growth

potential, and dividend per share all have a positive and considerable impact on profits per share,

with growth having the largest impact. At the 5% level, the current dividend payout and dividend

per share are both noteworthy. Size has a negative but negligible impact on EPS, whereas cash

flow, leverage, and one-lag dividend payout (prior dividend payout) have positive but negligible

effects.

2.4. Conceptual Model of the Study

DEPENDENT VARIABLE INDEPENEDENT VARIABLE

Organizational Performance Dividend Payment

Return on Assets

Return on Equity Dividend per share

Return on
Investment
 CHAPTER THREE

METHODOLOGY

3.0 Introduction

The techniques employed to conduct this study were covered in this chapter. It explains the

methods applied to get data from diverse sources. It further discusses the variables used in the

model, research design, population/sample size, model specification, method of data analysis as

well as a priori expectation.

3.1 Research Design

Research design according to (Onwumere, 2015) is a kind of blue-print that guides the researcher

in the investigation; a format which the researcher employs in order to systematically applies the

scientific method in the investigation of the problem. Ex-post factor research design was used in

this study because the researcher had no control over the variables used.

3.2 Population of the Study

Population comprises all elements of interest to the researcher. It is made up of all conceivable

elements, subjects or observations relating to a particular phenomenon of interest to the

researcher which can be observed or physically counted. Therefore, the population of the study

consists of all foods and beverages companies in Nigeria.

3.3 Sample and Sampling Technique

A sample is a part of the population deliberately taken to represent the population study. A

sample size in other units refers to the number of people or elements in a surrey or in sampling at

any point in time (Sekaran, 2017). The sample of this study consists of the ten (10) listed oil and
gas firm in Nigeria from the population which are Chevron, Mrs oil Nigeria plc, Conoil plc,

Nnpc, Mobil exxon Mobil, Seplat energy, Shell Nigeria, Oando plC, Total Nigeria energies and

Capital oil plc in which only 10 years annual report will be focused on ranging from 2012-2021.

The ten listed oil and gas firm in Nigeria were picked based on judgmental sample techniques.

3.4 Method of Data Collection

Data collection is the process of gathering and measuring information on targeted variables in an

established system, which enables one to answer relevant questions and evaluate outcomes. For

this study, secondary source of data was employed and the information was gathered from

relevant journals, textbooks, annual report of Chevron, Mrs oil Nigeria plc, Conoil plc, Nnpc,

Mobil exxon Mobil, Seplat energy, Shell Nigeria, Oando plC, Total Nigeria energies and Capital

oil plc.

3.5 Method of Data Analysis

Data analysis is the process of evaluating data using analytical and statistical tools to discover

useful information and aid in decision making process. Data shall be analyzed using E-view 09

Panel Pool Analysis (Ordinary Least Square) and test the relationship between the variables. The

analysis test includes descriptive statistics, fixed test, random test and Hausman test analysis.

3.6 Data Description and Model Specification

The variables considered for this study include; dividend per share represented the independent

variables while return on asset, return on equity and return on investment was the proxies used

for dependent variable.

The models that will be formulated include;

DPS = f (ROA, ROE, ROI)

DPS, = β0+ β1 ROA +β2 ROE + β3 ROI +μ

Where

DPS = Dividend per share

ROA = Return on asset

ROE = Return on equity

ROI = Return on investment

β0 = constant term

β1- β3 = Coefficient of Independent Variables

μ = Error term.
 CHAPTER FOUR

RESULTS AND DISCUSSION

4.0 Introduction

This section presents data analysis, interpretation and examines the effect of organizational

performance on dividend payment of listed oil and gas firm In Nigeria.

4.1 Presentation of Results

Table 4.1.1: Descriptive Statistics

DPS ROA ROE ROI

Mean 146.2365 1.320020 21.94504 1.392534

Median 8.900000 0.064000 7.285400 1.714831
Maximum 7896.000 55.50500 242.0505 4.444285
Minimum 0.000000 -0.116000 0.058800 -2.180370
Std. Dev. 800.3390 7.253884 50.28073 1.389154
Skewness 9.238402 6.514284 3.203955 -0.580090
Kurtosis 89.72349 45.23457 12.64179 3.111800

Jarque-Bera 32759.82 8139.594 558.4392 5.660484

Probability 0.000000 0.000000 0.000000 0.058999

Sum 14623.65 132.0020 2194.504 139.2534

Sum Sq. 63413710 5209.265 250287.0 191.0452
Dev.
 Observation 100 100 100 100
s
Source: E-View Output, (2023)

Table 4.1.1 reports the descriptive statistic of the variables employed, it was shown that dividend

per share has an average mean of 146.2365 with standard deviation of 800.3390 while return on

asset with an average mean of 1.320020 with standard deviation of 7.253884; return on equity

has an average mean of 21.94504 with the standard deviation of 50.28073. Lastly, return on

investment has an average mean of 1.392534 with the standard deviation of 1.389154. The

JarqueBera normality test indicates that dividend per share, return on asset and return on equity

are not normally distributed while return on investment is normally distributed. However, the

null hypothesis here means that the variables are normally distributed and not normally

distributed.

Table 4.1.2: Covariance Analysis

Date: 11/05/23 Time: 01:12

Sample: 2012 2021
Included observations: 100

Correlation
Probability DPS ROA ROE ROI
DPS 1.000000
-----

ROA -0.004577 1.000000

 0.9640 -----

ROE -0.072492 -0.063396 1.000000

0.4735 0.5309 -----

ROI 0.018149 -0.120383 -0.241185 1.000000

0.8578 0.2329 0.0156 -----

Source: Eview Output, (2023)

Table 4.1.3 reports the covariance Analysis of the variables employed. The correlation

coefficient between dividend per share and return on asset is -0.004577, this indicates weak

negative relationship between the two variables. The correlation coefficient between dividend

per share and return on equity is -0.072492 this indicates moderate negative relationship between

the two variables. The correlation coefficient between dividend per share and return on

investment is 0.018149; this indicates positive relationship between the two variables.
Table 4.1.3: Fixed Effect Model

Dependent Variable: DPS

Method: Panel Least Squares
Date: 11/05/23 Time: 01:22
Sample: 2012 2021
Periods included: 10
Cross-sections included: 10
Total panel (balanced) observations: 100

Variable Coefficient Std. Error t-Statistic Prob.

ROA -3.763697 12.19373 -0.308658 0.7584

ROE -1.522740 1.933775 -0.787444 0.4334
ROI 112.8604 75.47523 -1.495330 0.0389
C 341.7831 145.5096 2.348870 0.0214

Effects Specification

Cross-section fixed (dummy variables)

Period fixed (dummy variables)

R-squared 0.793873 Mean dependent var 146.2365

Adjusted R-squared 0.603762 S.D. dependent var 800.3390
S.E. of regression 757.6797 Akaike info criterion 16.28994
Sum squared resid 44778131 Schwarz criterion 16.86307
Log likelihood -792.4969 Hannan-Quinn criter. 16.52190
F-statistic 1.545796 Durbin-Watson stat 2.291645
Prob(F-statistic) 0.086539

Source: E-view Output, 2023

Table 4.1.4: Random Effect Model

Dependent Variable: DPS

Method: Panel EGLS (Cross-section random effects)
Date: 11/05/23 Time: 01:22
Sample: 2012 2021
Periods included: 10
Cross-sections included: 10
Total panel (balanced) observations: 100
Swamy and Arora estimator of component variances

Variable Coefficient Std. Error t-Statistic Prob.

ROA -2.854878 11.36442 -0.251212 0.8022

ROE -0.602344 1.693839 -0.355609 0.7229
ROI -22.29973 62.51664 -0.356701 0.7221
C 194.2766 168.1147 1.155619 0.2507

Effects Specification
S.D. Rho

Cross-section random 337.4158 0.1622

Idiosyncratic random 766.9723 0.8378

Weighted Statistics

R-squared 0.002640 Mean dependent var 85.35361

Adjusted R-squared -0.028527 S.D. dependent var 748.2313
S.E. of regression 758.8287 Sum squared resid 55278816
F-statistic 0.084719 Durbin-Watson stat 2.124324
Prob(F-statistic) 0.968233
 Unweighted Statistics

R-squared 0.004600 Mean dependent var 146.2365

Sum squared resid 63121983 Durbin-Watson stat 1.860368

Source: E-view Output, 2023

Table 4.1.5: Hausman Test

Correlated Random Effects - Hausman Test

Equation: Untitled
Test cross-section random effects

Chi-Sq.
Test Summary Statistic Chi-Sq. d.f. Prob.

Cross-section random 0.972190 3 0.8080

Source: E-view Output, 2023

In this analysis, Hausman Test was performed to determine the model that is more efficient. The

results of Hausman test are 0.8080 which is greater than 5%. This implies that Fixed Effect (FE)

is more efficient than Random Effect (RE).These two methods differ mostly on inferential

aspect. With fixed-effects model, a researcher can only make inference about a group of

measurements while inference can be made about the population through sample drawn when

using fixed effect.

4.2 Interpretation of Result

The result of fixed test shows the constant value stands at 341.7831 which equally mean that

while all other variables remain constant, dividend per share will increase by the same amount.

Coefficient of return on asset with -3.763697 reveals that for every unit decrease in return on

asset there will be same amount decrease in dividend per share. The coefficient of return on

equity stands at -1.522740 which mean that for every unit decrease in return on equity there will

be the amount decrease in dividend per share Lastly, return on investment with the coefficient

value of 112.8604 means that for every unit increase in return on investment, there will be the

amount increase on dividend per share.

The fixed test table also reveals the significance of the variable; it was found that return on asset

and return on equity does not have significant impact on the dividend per share while return on

investment has significant impact on dividend per share of the listed oil and gas firm In Nigeria.

The coefficient of determination R2 with value of 0.793873 implies that 79% of the variation of

dividend per share is influenced by the explanatory variables while the remaining 21% is being

explained by other variables outside the model but captured by the error term. Also, the adjusted

R2 explain fitness of the regression is high by 60% after adjusting for the degree of freedom. The

Durbin Watson statistics in the model is 2.29 this shows that there is absence of autocorrelation

among the variables.

F-statistics: This test the joint significance of the variables employed. Independent variables

should be jointly significant to explain dependent variable. This can be checked using F-test. If

the p-value of F statistic is less than 5 percent (0.05) we can reject the null and accept alternative

hypothesis. If otherwise, we can do the inverse.

From the result, p value is (0.086539) which is greater than 5percent level of significance. Hence

we accept the null hypothesis (Ho) that the overall estimate has a good fit which implies that our

independent variables are simultaneously not significant.

Hypotheses Testing

The following hypotheses are formulated to guide this study;

Hypothesis One

Ho1: Return on asset has no significant effect on Dividend per share of listed oil and gas firm in

Nigeria;

Decision Rule: The p value of return on asset shows 0.7584 which is statistically insignificant.

This means that we accept null hypothesis and then conclude that return on asset does not have

significant effect on dividend per share of listed oil and gas firm in Nigeria.

Hypothesis Two

Ho2: Return on equity has no significant effect on dividend per share of listed oil and gas firm In

Nigeria;

Decision Rule: The p value of return on equity shows 0.4334 which is statistically insignificant.

This means that we accept null hypothesis and then conclude that return on equity does not have

significant influence on dividend per of listed oil and gas firm in Nigeria.

Hypothesis Three
Ho3: Return on Investment does not have effect on dividend per share of listed oil and gas firm

In Nigeria.

Decision Rule: The p value of return on investment shows 0.0389 which is statistically

significant. This means that we reject null hypothesis and then conclude that there is significant

relationship between of return on investment and dividend per share of listed oil and gas firm in

Nigeria.

4.3 Discussion of Findings

The findings indicated that while return on investment had a positive association with dividend

per share over the study period, return on asset and return on equity had a negative relationship

with dividend per share. The relevance of the variable was further demonstrated by the results,

which showed that dividends per share are significantly impacted by return on investment, but

not by return on equity or return on asset. The f-statistics demonstrated that, during the research

period, independent factors had no discernible impact on the dependent variable.

 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

The main objective of this study was to investigate the impact of organizational performance on

dividend payment of listed oil and gas firm In Nigeria. This chapter presents the summary of

findings, conclusions and recommendations of the study.

5.1 Summary of the Study

The study's goal was to find out how organizational performance affected Nigerian listed oil and

gas companies' dividend payments.

The introduction, study background, problem statement, study goals, research questions, research

hypotheses, significance of the study, study scope, study limits, and term definitions were all

established in the first chapter.

The differing opinions of researchers on organizational effectiveness in relation to dividend

payout and other variables were revealed in chapter two.

The research approach was the subject of Chapter 3. It looks at the nature of the research project,

the research design used, the population the study was focused on, the sample size taken from the

population, and the methods used to do the sampling. There were further details on the data

source, analysis, presentation, and gathering tool.

The results are presented, the findings are interpreted, the findings are discussed, and the tested

hypotheses are either accepted or rejected in Chapter 4.

Chapter 5 also included recommendations for the research, a summary of the investigation, and a

conclusion.
5.1 Conclusion

The research study was aimed at investigating the impact of organizational performance on

dividend payment of listed oil and gas firm In Nigeria from 2012-2021 by developing a model

that is able to investigate how organizational performance has affected dividend payment

through the use of descriptive, covariance and Fixed test analysis. We proxied the variables of

organizational performance to include: Return on asset, Return on investment and Return on

equity. Dividend payment was represented by Dividend per share. Error Correction Model was

introduced in our estimation in order to have a parsimonious model.

From our result, one variable (return on investment) has a positive and significant impact on

dividend per share on the companies. Measures of return on asset and return equity on the other

hand, has a negative and insignificant impact on dividend per share.

In addition, Correlation analysis was done and showed the existence of a positive relationship

between variables of organizational performance and dividend payments of listed oil and gas

firm In Nigeria. Finally, hausman test was done on our variables and the results showed the

existence of a fixed causality between organizational performance and dividend payments.

This study has contributed significantly to the existing body of knowledge through its findings

which revealed that return on equity is positively related to dividend per share in listed oil and

gas firm In Nigeria.

Furthermore, this work and its findings serves as a framework for further research to be carried

out so as to find out what level of organizational performance can actually induce dividend

payment. In conclusion, it is important to note that since organizational performance induces

dividend payment as revealed by this study, Board of directors and managers should strengthen

and enhance effective organizational performance at all levels for sustainable growth and

development of the organization.

5.2 Recommendations

i. Based on the study's conclusions, additional research is strongly advised in order to make

the study more thorough. This can be done by expanding the data collection to include

other manufacturing companies in addition to those represented by Nigeria's listed oil and

gas companies. Although the study focused on organizational performance within

particular dimensions, it is still possible to do similar research in other strategic areas of

importance. The relationship between dividend payment and organizational success is

complex and requires examination by a variety of experts, hence this list is not all-

inclusive as further research is required to fully understand the variables.

ii. The study's result leads to the following recommendations for management: i. Since

listed oil and gas companies in Nigeria are required to pay dividends, management should

focus on increasing their Dividend Per Share (DPS), Return on Assets (ROA), and Return

on Equity (ROE).

iii. ii. The study suggests that management of Nigerian listed oil and gas companies spend

enough time creating a dividend policy that would improve the company's performance

and shareholder value.

iv. iii. In order to increase the profitability of Nigerian oil and gas companies as well as the

dividend per share of listed oil and gas companies in Nigeria, the government should

foster an atmosphere that encourages investment, production, and economic

diversification.
 v. iv. In order to boost turnover and profitability, the oil and gas management should also

modernize their services with a focus on customer happiness. This will attract investors

and ultimately raise the share prices of the companies.

vi. v. The management and board of directors should always uphold the ethical standards of

decision-making, integrity, and improved knowledge.

vii. vi. Business organizations should make sure they have a sound dividend policy in place.

This will increase their profitability and draw capital into the companies.
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