IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 9 NO. 4 2023
DOI: https://doi.org/ 10.56201/jafm.v9.no4.2023.pg69.83

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Dividend Clientele Hypothesis: An Empirical Test in Emerging Nigeria Financial Market

Dr. Egileoniso Daniel James

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Abstract

This study tested the dividend clientele hypothesis of Modigliani and Miller using panel data of quoted manufacturing firms in Nigeria. The purpose was to investigate how dividend clientele effect relates to share prices. The estimated regression model found that changes in dividend payout ratio, retained earnings and tax explained 73.9 percent variation in stock prices of the quoted manufacturing firms. Correlation and multiple regressions were used to test the relationship between variables. Cross sectional data were sourced from financial statement and annual reports of the firms. Based on the analysis of fixed and random effect results, fixed effect was used. From the findings, the study concludes that variation in dividend payout ratio, retained earnings and income tax positively affects the stock prices of the quoted manufacturing firms. The study recommends that relevant authorities should ensure dividend policy framework that will positively affects the share prices of the quoted manufacturing firms

keywords:

Dividend Clientele Hypothesis, Financial Market, Dividend Payout Ratio, Retained Earnings, Tax

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References:

Akani, H. W., & Lucky, A. L., (2014). Money supply and aggregate stock prices in Nigeria:
An analysis of co-integration and causality test. Research Journali’s Journal of
Finance, 2 (10), 1 – 24.

Amihud, Y., & Maurizio M., (1997). Dividends, Taxes, and Signaling: Evidence from
Germany, Journal of Finance 5(2), 397-408.

Bhattacharya, S., (1979).Imperfect information, dividend policy, and ‘the bird in hand
Fallacy. Bell J. Economics, 10: 259–270.

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