The Effects of Corporate Governance Mechanisms on Firms Dividend Payout Policy in Nigeria

Abstract

This article investigates the relationship between corporate governance mechanisms and the dividend payout policies of firms in Nigeria. To achieve the objectives of this study, a total of 50 listed firms were selected and analyzed for the study using the judgmental sampling technique. Also, the annual reports for the period 2006-2011 were used for the study. The paper was basically modeled to examine the effects of board size, ownership structure, CEO duality and board independence on the dividend payout decisions of firms operating in Nigeria using the regression analysis method. Findings from the study revealed that board size, ownership structure, CEO duality and board independence had a significant positive effect on the dividend payout decisions of the sampled firms. The study therefore concludes that greater proportion of independent directors in a firm provides a positive influence on firms’ dividend payout decisions with a view to reduce the free cash flow.