Effect Of Dividend Payment On Corporate Performance Nigerian Banks

Effect Of Dividend Payment On Corporate Performance Nigerian Banks

Abstract

In this exploration work named “ Relationship between tip payment and commercial performance of Access Banks Plc and Guarantee Trust Bank Plc ”. The experimenter examined the relationship between earning per share and tip per share of named Nigerian banks. Evaluates the relationship between establishment size and tip per share of Nigerian banks. Examined the relationship between return on asset and tip per share of Nigerian banks. estimated the relationship between net means value per share and tip per share of Nigerian banks. The experimenter made use of only secondary data from six times periodic report and accounts of the two quoted bank( Access bank Plc and Guaranty Trust Bank Plc) listed on the Nigeria stock exchange were collected and retrogression analysis was employed in the data analysis. The experimenter set up out that there’s significant relationship between earning per share and tip per share of named Nigerian banks. It was also discovered that there’s significant relationship between establishment size and tip per share of Nigerian banks. The experimenter inversely set up out that there’s relationship between return on asset and tip per share of Nigerian banks. The study shows that there’s significant relationship between net means value per share and tip per share of Nigerian banks. Grounded on the findings the experimenter recommends that Organizations should insure that they’ve a good and robust tip policy in place. This will enhance their profitability and attract investments to the associations. Directors of commercial associations should be made to modernize the records of shareholders including their coming- of- kin to avoid a deliberate diversion or overdue retention of unclaimed tip clearances. Due procedures for the recognition and application of profit arising from investment of unclaimed tip should be effected and duly reckoned for.

Chapter One

Preface

Background of the Study

tip is the return that accrues to shareholders as a result of the plutocrat invested in acquiring the stock of a given company( Eriki and Okafor 2002). While tip policy on the other hand is concerned with division of net profit after levies between payments to shareholders( ordinary shareholders) and retention for reinvestment on behalf of the shareholders( Kempner 1980). A delicate decision for both public and private limited companies is to determine the applicable position of tip to be paid to shareholders, and to decide whether or not to offernon-cash druthers similar as scrip tips According to Davidson( 1990). The actuality of some share price responses on tip advertisement prompts an analysis of the substantiation for both shareholder clienteles and possible commerce of enterprises ’ tip programs with crucial conditioning similar as internal investments. An aspect of the proposition of tip policy is part of a continuum of control allocations between directors and investors, and hencecross-sectional variations in tip policy are driven by an beginning factor. The allocation of controls between the director and investors is important not because of agency or private information problems, but because of its potentially divergent beliefs that can lead to a disagreement about the value of design available to the establishment. This beginning factor is “ Commercial Performance ”. ‘ Commercial performance is at the heart of the directorial function of an association ’( Samuel 1989). Analysis of commercial performance is substantially concerned with the development of a modeling methodology to help in the opinion of once performance and therefore give a frame for assessing the effect of changes in operating parameters as a companion for unborn planning. The performance of an Organization is measured by the choice of the operation form of wealth to be held. If the performance of an association is good there will be little or no disagreement between the operation and the shareholders.( Anyigbo, 2008)

In assessing Commercial Performance, the emphasis is on assessing the current geste of the association in respect to its effectiveness and effectiveness. To measure overall commercial performance pretensions are set for each of these perspectives and specific measure for achieving similar pretensions are determined. Each of these perspectives is critical and must be considered contemporaneously, to achieve overall effectiveness and effectiveness, and to succeed in the long-run.However, performance evaluation will come ‘ unstable ’, If any area is eitherover-emphasized or underemphasized. In this way, the end of the conception is to establish a set of measures both fiscal andnon-financial, through which, a company can control its conditioning and balance colorful measures to effectively track performance.

Modigliani and Miller( 2011) observed that ‘ The theoretical principles underpinning the tip policy and its impact on enterprises can be described either in terms of tip impertinence or tip applicability proposition ’. thus, tip policy is inapplicable for the cost of capital and the value of the enterprises in a world without levies or sale cost. This shows that when investors can produce any income pattern by dealing and buying shares, the anticipated return needed to induce them to hold establishment’s shares will be steady to the way the establishment packages its tip payments and new issues of shares. It’s to be observed that a establishment’s means, investments openings, anticipated unborn net cash overflows and cost of capital aren’t affected by the choices of tip policy.

tip payments and influence policy are substitute medium for controlling the agency cost of free cash inflow hence, improvesperformance.However, the position of exertion in the association will increase to gain further income and have redundant retained earnings to meet the standard set, If a establishment’s policy is to pay tip each time end to shareholders.

‘ tip policy has the effect of destabilizing tip as only a prolonged increase or drop in gains will affect the average adequacy to have any perceptible effect on the size of the distribution ’. Since it’s a conservative tip policy- in the long run, only one half of all gains will be distributed and there will be substantial buildup of retained earnings. This will clearly support further, the thickness of tips, which could for a while, be maintained indeed in the face of factual losses. It may also relieve the company of having expedient to external sources of finance. The retention under this policy bears no relationship to the vacuity of profitable investment openings. The threat is that systems yielding lower than the true cost of capital will be accepted in order to absorb finances which would else lie idle. Shareholders are entitled to a profit sluice of tips. The value of the share corresponds to the present value of this sluice of tip payments.

So numerous factors affect the performance of commercial associations and one of those factors is tip policy. tip policy serves as a medium for control of a directorial opportunism. Empirical studies show that enterprises in developing Countries(e.g. Nigeria) smooth on their income and thus, their tips. The pattern of commercial tip programs not only varies over time but also across countries, especially between developed, developing and arising Capitalmarkets.However, tip policy will affect directly the establishment’s cost of capital, If the value of a company is the function of its tip payments. But is there any significant relationship between tip policy and commercial performance in form of profitability investment and Earning per Share? This is the question this exploration study intends to answer.

Statement of the problem

The major factor that needed this exploration work is that former studies has shown that the fiscal performance of Nigerian banks are veritably poor when compared with their counterpart in other advanced countries, as a result of this the experimenter tends to examine the relationship between fiscal performance measures and determinants of tip programs in Nigeria Banking assiduity