OWNERSHIP STRUCTURE AND DIVIDEND POLICY OF LISTED INSURANCE FIRMS IN NIGERIA

Abstract

Dividend policy is a crucial decision taken by managers of firms, and it has great effect on the value of the firm. Dividend payment has been evidenced to reduce agency conflict; thus, reducing agency cost. This study examines the effect of ownership structure on dividend policy of listed insurance firms in Nigeria. Ownership structure was proxied by managerial ownership and institutional ownership. The study employs secondary data extracted from the audited financial reports of twenty six (26) sampled insurance firms listed on the Nigerian Stock Exchange (NSE) that have their annual financial reports available over the period 2013 to 2017. The study used fixed effect panel regression result for the analysis. The analysis revealed that managerial ownership has a significant effect on dividend policy with institutional ownership having a negative and insignificant effect on dividend policy. Based on the findings of the study, it is recommended that listed insurance firms in Nigeria should focus more on managerial ownership in their quest to achieve the payment of dividend to every shareholder. This has become necessary in view of the fact that managers having shareholdings in the firm will make them work wholeheartedly because of the return they would receive on their shareholdings.