Corporate Governance Mechanisms in Minimising Agency Problems through Dividend Policy: Case Study of Listed Industrial Goods Companies in Nigeria

Abstract

Dividend payment is an effective instrument that minimizes agency problems between managers and shareholders as it increases potential default risk of the firm and thereby reduces the available funds to managers. This study examines the impact of corporate governance mechanisms on the dividend policy of the Nigerian industrial goods firms. The study employed the ordinary least square regression in analyzing the data gathered from the annual report of sample ten firms covering 2014 to 2018. The result shows that board composition and CEO dual have a positive effect on dividend policy while audit committee composition has a negative effect on the dividend policy. The study recommends that the positions of board chairmanship and CEO should be separated, and also more independent competent board members should be incorporated in the board, in order to enhance managerial capability thereby increasing the level of Corporate Governance mechanisms on dividend policy of the Nigerian industrial goods firms.