BOARD COMPOSITION, OWNERSHIP CONCENTRATION AND DIVIDEND POLICY OF LISTED CONSUMER GOODS COMPANIES IN NIGERIA

Abstract

Board composition is the combination of executive and non-executive directors on the board, executive directors are in charge of the company affairs are responsible for proposing a dividend to be paid to shareholders based on the organizational performance and the future outlook. This study examined the moderating effect of ownership concentration on the relationship between board composition and dividend policy of listed consumer goods companies in Nigeria. Expost facto research design was used and multiple regression analysis was used to analyze the secondary data extracted from the annual report and account of the companies under study. The findings indicate the composition board has a positive and significant influence the dividend payout ratio of listed consumer goods companies in Nigeria. The result also indicates the interaction effect has changed the relationship between ownership concentration and a dividend payout ratio of listed consumer goods companies in Nigeria to negative and significant. This implies that concentration ownership influenced an independent board to decline a dividend payment because the concentration of ownership is mostly owned by institutional shareholders who might be interested in capital gain than dividend payment. It is recommended that to improve board efficiency and reduce agency problems, the higher number of non-executive directors should be maintained by the Nigerian consumer goods companies as this will significantly increase the dividend payout ratio of the listed consumer goods companies in Nigeria.  In addition, management should ensure that the profit retained is used to finance profitable investment opportunities to enable the maximization of shareholders; wealth.