Determinants of Dividend Policy in Foods and Beverages Manufacturing Firms in Nigeria

The realization corporate goals of entrepreneurial investment by manufacturing firms in Nigeria has been inhabited by lack of sufficient funds and lack of access to capital. This lowers the firms’ financial leverage leading to low level of investment, low production and liquidity problems. This coupled with the high rate of corporate income tax in the country resulted in poor earnings and zero or residual dividend policy in most of the firms. This prompted the study to examine the determinants of dividend policy in foods and beverage manufacturing firms in Nigeria. The specific objectives of the study are: explore the effect of earnings per share on dividend per share; ascertain the effect of liquidity on dividend per share; evaluate the effect of financial leverage on dividend per share; and appraise the effect of corporate income tax on dividend per share of foods and beverage manufacturing firms in Nigeria. A sample of 5 firms was selected from the population of 15 foods and beverage manufacturing firms listed on the Nigerian Stock Exchange during the period from 2011 to 2020. The data extracted from the financial statements of the selected firms were analyzed using multiple regression analysis. Findings suggest that earnings per share, liquidity and leverage positively and significantly determine the dividend policy of foods and beverage manufacturing firms in Nigeria. Findings further shows that corporate income tax negatively and significantly determines the dividend policy of the firms. Based on these findings, the study recommends that foods and beverage manufacturing firms in Nigeria should increase their profitability and repurchase their share floating on the stock exchange to boast dividend payment to their shareholders. Repurchased shares increase firm value and enable firm owner consolidate ownership of their firms. Also, the firms should increase their liquidity by investing in shirt term assets and also by regularly monitoring their liquidity positions. It was further recommended that each firm should locate its optimal capital structure and use debt financing up to the optimal point. Finally, the firms should engage tax consultants that will advise them on tax matters from time to time, this will assist the firms reduce tax liability and boast their dividend policy