IMPACT ON DIVIDEND PAYOUT POLICY IN NIGERIA COMPANIES
CHAPTER ONE
1.0 INTRODUCTION
     Dividend policy is one of the strategic policies of a business organization, it is usually a statement which contains a plan of action concerning dividend. Is therefore seen as a guide to the firm which resolves around the objective of maximization of shareholder’s wealth. It can also be called the time pattern of payout dividend.
    In practice, every form follows some kind of dividend policy, which retains a portion of the net earnings in such a manner that it will not constitute a threat to dividend payment. Firms are more willing to payout dividends, when they have no problem with meeting their short-term needs (Obligations) for cash and try to increase their payout ratio from its previous level. The decision of the firm regarding how much earning should be paid out as dividend and how much can be retained results in an optimal Dividend policy.
    An optimal dividend poicy comes in between two extreme which is; paying out all earnings as dividend or retaining all earnings without given out dividend. A com pany, as a first step might make a forecast of theamount of dividends to be paid out provided, it is not in excess of the stipulated percentage before the accounts are audited. Issues underlying the dividend policy are payout ratio, retention rate, capital gains and dividend yield.
        However, the issues as to why firms pay dividend is as yet unresolved, dividend policy is important for several reasons:
Firstly, a firm uses dividend as mechanism for financial signaling to the outsiders, regarding the stability and growth prospects of the firm. Secondary, dividend play an important role in a firm’s capital structure.
    Corporate dividend policy is known to be a function of many factors-Liquidity, investment, leverage, size of the firm (in terms of total assets), profitability etc. the interplay of these factors remains a critical issue I distribution of earning after tax between retained earnings and dividend.
    It is desirable therefore, that every worthwhile organization should propose a dividend policy  which take into consideration these factors, thereby striking a balance between current dividends and future growth and hence maximizing the price of the firm’s stock and share holder’s wealth.
1.1 STATEMENT OF THE RESEARCH PROBLEM
    In Nigeria, dividend policy has been of much concern to financial  managers, and firms at large. Firms are faced with problem of sharing dividends to stockholders and retaining their earnings with the view to ploughing it back into the business so as to foster further growth of the business. From the above research problems, the following research questions were generated;
1.    Does investment decision affect dividend decision?
2.    Does the size of the firm affect dividend policy?
3.    To what extent does leverage affect dividend payout?
4.    Dows the level of liquidity influence dividend decision?
5.    Do the target earnings (profitability) influence dividend payout?
1.2 OBJECTIVE OF STUDY
1. To establish the impact of investment decision on dividend decision
2. To examine if the size of the firm affect dividend policy,
3. To ascertain the impact of leverage on dividend payout.
4. To know if liquidity affect dividend decision.
5. To determine the target earnings (profitability) influence on dividend payout.
1.3 SCOPE OF STUDY
    The study covers as sample size of thirty companies from the manufacturing sector, quoted on the Nigerian stock exchange. The period covered is precisely a particular year (2008).
1.4 SIGNIFICANT OF STUDY
 It is a sincere belief of the researcher that this study will go a long way in contributing to the existing knowledge on dividend payout policy
    To the researcher, a vast knowledge on dividend policy, financial ratios and annual reports. The results from this study would provide financial analysts and the public; the knowledge as to what constitute reasons why companies either give low dividend or high dividend to shareholders.
Hypothesis
1.    HO:  Investment decision does not affect dividend decision.
H1: Investment decision affect dividend decision.
2.    Ho: The size of the firm does not affect dividend policy.
H1: The size of the firm affect dividend policy.
3.    Ho: There is no relationship between leverage and dividend payout.
H1: There is a relationship between leverage and dividend payout.
4.    Ho: The level of liquidity does not influence dividend decision.
H1: The level of liquidity influence dividend decision.
5.    Ho: There is no relationship between target earnings (profitability) and dividend payout.
H1: There is a relationship between tare earnings (profitability) and dividend payout.
1.5    LIMITATIONS
1.    Smallness of the sample size.
2.    The imprecise measurement of variables (with respect to rounding off of figures)
3.    The use of a particular year.
4.    Different accounting policies of companies.
1.6    DEFINITION OF TERMS
1.    Dividend: dividends are payment made by a corporation to its shareholder members.
2.    Payout ratio/retention ratio: this is dividend as a percentage of earning. 100 percent minus payout percentage is called retention ratio.
3.    Liquidity: the extent to which a firm’s assets are liquid (assets held in cash), enabling it to pay its debts when they fall and also to move into new investment opportunities.
4.     Leverage: the use, by a company of its limited assets to guarantee substantial loans to finance it business.
5.    Investment: this is investing in anticipating of a firm current funds on long-term assets in anticipation on expected flow of benefits.