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. 8 2023
DOI: https://doi.org/10.56201/jafm.v9.no8.2023.pg59.80

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Nexus between Dividend Payment and Earnings Quality of Quoted Manufacturing Firms in Nigeria

Sunday, David, Manafa, Chinyere Joan, Nduokafor, Christian Ogochukwu

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Abstract

The objective of this study is to ascertain the nexus between dividend payment and earnings quality of quoted manufacturing firms in Nigeria. The study adopted the ex-post facto research design. It covered a period of ten years spanning from 2012 to 2021. The population of the study was44 quoted manufacturing firms out which 32 were selected as sample size using purposive sampling techniques. The data were collected from financial statement of the selected firms listed on the Nigeria Exchange Group as at 31 st December, 2021. The data were analyzed using Ordinary Least Square and operated by E-Views 11. The results showed that there is a significant and positive relationship between dividend-paying status and earning quality, there is a significant and negative relationship between dividend size and earning quality, there is a significant and positive relationship between dividend changes and earning quality, and there is a significant and negative relationship between dividend persistence and earning quality. This study concluded that there is nexus between dividend payment and earnings quality of listed manufacturing companies in Nigeria. It was recommended that, managers should maintain an increase in the value of the (cash) dividends paid divided by the net income of the year. Shareholders should watchfully evaluate the size of dividend payments: This is because managers paying bogus dividends may mask unhealthy firm performance. Managers should adopt a fluctuating rather than static dividend policy for its positive signaling effect on earnings quality. Investors should prioritize a high dividend payout since dividends offer assurance regarding the company's financial stability. The shareholders and policy regulators should be watchful of companies consistently declaring profits even in unstable times.

keywords:

Dividend Payout, Dividend Paying Status, Dividend Changes, Dividend Size, Dividend Persistence and Earnings Quality

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References:

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Adelegan, O.J. (2001). An empirical analysis of the relationship between cash flows and
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