Advances in Economics and Business 7(6): 256-265, 2019 http://www.hrpub.org DOI: 10.13189/aeb.2019.070602 Factors Influencing Dividend Payout Policy of Firms Listed on the Nigerian Stock Exchange Rukaiyat Adebusola Yusuf Department of Accounting, Kingston University, London, United Kingdom Received December 24, 2019; Revised September 23, 2019; Accepted October 1, 2019 Copyright©2019 by authors, all rights reserved. Authors agree that this article remains permanently open access under the terms of the Creative Commons Attribution License 4.0 International License Abstract Dividend policy decisions in the emerging markets has continued to receive attention lately in academic research due to the differences observed between developed and emerging markets and sparse empirical evidence in this area. This research is directed towards the emerging markets in Africa. It investigates dividend decision in 299 companies listed in Nigeria on Nigerian stock exchange market. This paper compares dividend decisions in the pre-crisis, crisis and post-crisis periods. Six possible determinants of dividend policy was analyzed using correlation and multiple regression analysis for a period of 13 years (2002 to 2014). The companies are segregated into active and dead groups for the purpose of the analysis. This paper contributes to the current body of knowledge by giving more insights to dividend policy in the largest economy in Africa taking account of the financial crisis of 2008. Liquidity and growth opportunities are common predictors in the three periods. Results are in support of agency, pecking order and signalling theories. The predictors in the regression model explains 42% variability in dividend policy before the crisis in Nigeria but about 20% during and afterwards. Keywords Dividends, Nigerian Stock Exchange, Financial Crisis, Agency Theory 1. Introduction Dividend policy has continued to receive attention in academic literature from the 1950s till date because in real life it is an important issue for quoted companies. Dividend is the fraction of net earnings paid to shareholders at determined intervals usually quarterly, semi-annually or annually. Managers are left to decide whether or not to pay dividends, when to pay dividends and what pattern should dividend payments follow, these decisions have grave consequences for the business, shareholders and managers and are referred to as dividend policy of a firm. Despite researches by various scholars aimed at solving the puzzle around why companies pay dividends? Why investors prefer dividends? Do dividends affect firm’s value? This contentious issue has remained one of the top issues of utmost concern in finance. Lintner (1956), Miller and Modigliani (1961) and Black (1976) were among the first scholars who attempted to answer the pertinent questions on dividend policy. Miller and Modigliani (1958, 1961) found dividend policy not having effect on shareholders wealth if investment policy is held constant with low dividend payment leading to greater retained earnings and vice versa. Conversely, according to Lintner (1956) firms carefully set up their dividend policies. Furthermore, the puzzle becomes deeper with higher taxation on dividends in the United States compare to capital gains (La Porta, Lopez-De-Silanes, Shleifer and Vishny, 2000). These evidences pose a puzzle. Researches on dividend policy have led to diverse results, from available literature the divergent empirical results on dividend policy studies can be categorized into three major views, the right wing view been conservative asserts increase in firm value with rise in dividend paid. This is based on the notion that dividends can signal company’s future prospects and that managers have asymmetric information. The centrist view affirms no changes in firm’s value with dividend cut or increase because shareholders buy shares in companies whose dividend policy they prefer while the left wing view been radical asserts decrease in firm value with increase in dividends payments based on differential treatment between dividend and capital gains in taxation (Al-Malkawi 2008, Mehta, 2012). Researchers in developed countries have developed theories to explain dividend policies but yet there is continued disagreement on the one which best explains dividend policy. Black (1976) tried to find the rationale behind dividend payment by corporations but he could not exactly say why, thus he termed this as the “Dividend puzzle”. Do investors prefer dividends because it’s the