OWNERSHIP STRUCTURE AND DIVIDEND POLICY: THE MODERATING EFFECT OF PROFITABILITY OF LISTED DEPOSIT MONEY BANKS (DMBs) IN NIGERIA

Abstract

The study explores the relationship between the ownership structure and dividend policy of listed deposit money banks in Nigeria with a focus on the moderating effect of profitability for the period 2014-2020. Thirteen (13) Deposit Money Banks (DMBs) were selected out of 14 (DMBs), with data analyzed from the annual financial statements of the DMBs.  Ordinary Least Square (OLS) regression was used to analyze the data from the listed DMBs in this study.  The findings shows that managerial ownership shows a positive and insignificant effect on dividend payout ratios; foreign ownership has a positive and insignificant influence on the dividend payout ratio of listed DMBs in Nigeria. Conversely, institutional ownership shows a negative and significant influence on the dividend payout ratio of DMBs. Moreover, ownership concentration shows a negative and significant influence/effect on the dividend payout ratio of the DMBs. Furthermore, the study shows that profitability plays a moderating role in the relationship between managerial ownership and dividend payout ratio leading to a positive effect. The research highlights the intricate interplay between ownership structure, profitability, and dividend policy within Nigerian deposit money banks. Based on the findings and conclusion drawn, the following recommendations are proffered: Encourage managerial ownership alignment for improved governance, focusing on long-term value. Although not statistically insignificant for dividends, alignment enhances transparency and strategic vision, and attracts foreign investment to diversify ownership for fresh perspectives. Despite the not-significant dividend impact, diversification enriches strategic direction and global insights, and Leverage profitability has an impact on managerial ownership for dividends. Align managerial incentives with profitability gains for sustainable value creation.