The Effect of Dividend Payout on Performance Evaluation: Evidence of Quoted Cement Companies in Nigeria (Published)
The issue of dividend payout is a very important matter in the current business environment and more especially on the performance evaluation of firms’. The dividend payment decisions of firms are the primary element of any corporate policy which is basically the benefit of shareholders in return for investing their money in the organization. The successful selection and use of appropriate dividend policy is one of the key elements of the firm’s performance evaluation. Hence, proper care and attention need to be given when such decision is taken. The purpose of this paper is to investigate the effect of dividend payout on performance evaluation of quoted cement companies in Nigeria over the past twelve (12) years period from 2003 to 2014. The researcher employed four (4) variables for the analyses such as: Dividend Payout Ratio (DPR); Return on Capital Employed (ROCE); Return on Assets (ROA) and Return on Equity (ROE). Performance evaluation as dependent variable is represented by Return on Capital Employed (ROCE); Return on Assets (ROA) and Return on Equity (ROE) while Dividend Payout stands as Dividend Payout Ratio (DPR) for independent variable. Secondary data were obtained from the financial statements (Statement of Comprehensive income and Statement of Financial Position) of the selected quoted cement companies in Nigeria on Nigerian Stock Exchange. The model specification for the analysis of data is ordinary least squares techniques applied as panel estimation while descriptive research method and simple linear regression for the analyses. The researchers’ empirical results suggest that dividend payout ratio (DPR) has positive relationship with all the dependent variables (ROCE, ROA and ROE) used for this study; that dividend payout ratio (DPR) has statistically significant with Return on Capital Employed (ROCE) and Return on Asset (ROA) while DPR has statistically insignificant with Return on Equity (ROE) of quoted cement companies in Nigeria and that R2 of all the dependent variables (Return on Capital Employed; Return on Assets and Return on Equity) used for this study were affected by other variables outside our model. It further revealed that dividend payout ratio (DPR) has statistically effect on Return on Capital Employed (ROCE) and Return on Assets (ROA) of quoted cement companies in Nigeria while DPR has no statistically effect on Return on Equity (ROE) of quoted cement companies in Nigeria. Based on this, we recommend that management should improve on their Return on Assets (ROA) and Return on Equity (ROE) as they are of great important in the valuation of performance evaluation of quoted cement companies in Nigeria; adopt optimal dividend policy that would better the lots of shareholders both in the short-run and long-run; devote adequate time in designing a dividend policy that will enhance firm’s performance and shareholder value and adopted good dividend payout policies in order to reduce agency cost and maximise the value of the company and attract more investors.
Keywords: Dividend Payout Ratio, Return on Assets, Return on Capital Employed, Return on Equity, Spss and Dividend Policy