Enhancing Firm Value Through Ownership Concentration: Insights from Dividend Policy in Nigerian Consumer Goods Sector


Authors : Akpadaka, Ovbe Simon

Volume/Issue : Volume 8 - 2023, Issue 10 - October

Google Scholar : https://tinyurl.com/4fns4sjh

Scribd : https://tinyurl.com/3xwkp2uu

DOI : https://doi.org/10.5281/zenodo.10044108

Abstract : In the evolving landscape of contemporary corporate finance, the intersections between dividend policy, ownership concentration, and firm value present intricate interplays demanding nuanced exploration. Adopting a positivist stance, this paper examines how ownership concentration significantly modifies the relationship between dividend policy and company value. The primary objective of this study revolves around examining the moderating effect of ownership concentration on the dividend policy-firm value dynamic. To this end, we embarked on an analysis of publicly traded consumer goods companies over a decade, evaluating dividend practices, ownership nuances, and their subsequent impacts on firms’ value. The ex-post facto research design capitalizes on a balanced panel data approach, encompassing data from 14 pivotal firms spanning the years 2013–2022. Multiple regression served as our analytical beacon. The revelations were insightful: ownership concentration and dividend payout ratio both exhibited a significant and positive influence on the valuation of listed consumer goods firms in Nigeria, suggesting an enhanced perceived value for these firms. The relationship between dividend payment ratio and firm value was underscored by a favorable and significant moderation effect of ownership concentration. For business leaders, investors, regulators, and other key stakeholders, these findings stand as instrumental. Firms, armed with this knowledge, can strategically sculpt their dividend policies, aligning with shareholder interests, thereby optimizing firm value. Investors, on the other hand, can tap into these observed correlations for more astute decision-making. This paper not only bridges existing knowledge gaps but also offers actionable recommendations for firms aiming to craft optimized dividend policies, considering the multifaceted dynamics of ownership structures, and thereby enhancing their value proposition in the marketplace.

Keywords : Dividend Policy, Ownership Structure, Firm Value, Nigerian Exchange Group.

In the evolving landscape of contemporary corporate finance, the intersections between dividend policy, ownership concentration, and firm value present intricate interplays demanding nuanced exploration. Adopting a positivist stance, this paper examines how ownership concentration significantly modifies the relationship between dividend policy and company value. The primary objective of this study revolves around examining the moderating effect of ownership concentration on the dividend policy-firm value dynamic. To this end, we embarked on an analysis of publicly traded consumer goods companies over a decade, evaluating dividend practices, ownership nuances, and their subsequent impacts on firms’ value. The ex-post facto research design capitalizes on a balanced panel data approach, encompassing data from 14 pivotal firms spanning the years 2013–2022. Multiple regression served as our analytical beacon. The revelations were insightful: ownership concentration and dividend payout ratio both exhibited a significant and positive influence on the valuation of listed consumer goods firms in Nigeria, suggesting an enhanced perceived value for these firms. The relationship between dividend payment ratio and firm value was underscored by a favorable and significant moderation effect of ownership concentration. For business leaders, investors, regulators, and other key stakeholders, these findings stand as instrumental. Firms, armed with this knowledge, can strategically sculpt their dividend policies, aligning with shareholder interests, thereby optimizing firm value. Investors, on the other hand, can tap into these observed correlations for more astute decision-making. This paper not only bridges existing knowledge gaps but also offers actionable recommendations for firms aiming to craft optimized dividend policies, considering the multifaceted dynamics of ownership structures, and thereby enhancing their value proposition in the marketplace.

Keywords : Dividend Policy, Ownership Structure, Firm Value, Nigerian Exchange Group.

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