Article,
Testing the Lintner’s Dividend Model in an Emerging Market: A Dynamic Panel Fixed Effects Analysis of Listed Deposit Money Banks, Food and Beverages Companies in Nigeria
Central Asian Journal of Innovations on Tourism Management and Finance, 2 (12): 1-9 (December 2021)
Abstract
Motivated by the conflicting results found by previous studies, this study empirically tests the Lintner’s dividend model and investigating the factors that determine a firm’s payout policy in Nigeria using the dynamic fixed effects method. The study is based on unbalanced panel data obtained at yearly frequency from 18 listed deposit money banks and food and beverages firms in Nigeria, covering from 2013 and 2019. The results show that firm size, profitability and future earnings prospect are the key determinants of dividend per share, while future earnings prospect is the only factor affecting the optimal payout ratio. Contrary to Lintner’s argument, there is evidence that past dividends and current dividends are not significantly related. Also, corporate governance has no significant impact on dividend policy. The implications of these results are discussed in the paper.
