Stock Liquidity, Payout Policy and Performance of Listed Non-Financial Firms in Nigeria

Abstract

This study examines the trend of stock liquidity and payout of non-financial listed firms in Nigeria. It particularly assesses the macro-economic factors influencing payout policy of non-financial listed firms in Nigeria. It also examines the effect of stock liquidity on financial performance of non-financial listed firms in Nigeria; and analyzes the dynamic relationships among stock
liquidity, payout policy and performance of non-financial listed firms in Nigeria. The study adopted longitudinal research design. Secondary source of data collection was employed. A sample of 50 non-financial listed firms out of the population of 109 non-financial firms were selected using purposive sampling technique. The results revealed that macro-economic factors such as GDP (t = 2.1134, p<0.05) and Exchange rate (t=0.3127, p<0.05) have positive effect on Payout Policy of non-financial listed firms in Nigeria. Furthermore, the results revealed that turnover ratio TOR had positive and significant relationship with dividend payout ratio DPR
(t=2.7295, p<0.05) and firm performance (t=2.2862, p<0.05). Finally, the result of the dynamic relationship depicted that dividend payout ratio DPR does not respond to shock in both turnover ratio TOR and ROA. Also, the TOA model revealed that ROA and DPR fail to induce the reaction of stock liquidity. The study concludes that stock liquidity has significant positive influence on
both payout policy and performance of non-financial listed firms in Nigeria and those firms with more liquid stocks pay higher amount of dividends than those with less liquid stocks.