Do Corporate Governance Mechanisms and Firm Life Cycle Theory matter in Firm Dividend Payments: Empirical evidence from Selceted Sub-Sharan African Countries

Abstract

This paper empirically explored the effect of corporate governance mechanisms and firm life cycle stage on dividend payouts of quoted non-financial companies in Nigeria, South Africa and Kenya and the study period covers 2007 to 2017. System generalized method of moments (Sys-GMM) was employed in the analysis using dependent variables (dividend payout), explanatory variables (board size, board gender diversity, board independence, managerial ownership, retained earnings to total equity and firm age) and moderating variables (profitability and firm size). Results of the estimated dynamic panel analysis revealed that both corporate governance mechanisms and life cycle are not important factors influencing firm dividend pay-out in the chosen Sub-Sahara Africa nations. Based on the results, the study recommends inter alia that board attributes (like board size, board gender diversity, board independence and managerial ownership) and life cycle stage of firms need not to be considered with respect to explaining payouts of dividend among the firms in the selected sub-Sahara Africa countries. Apparently, larger independent members in boards are not desirable if the goal is increasing and sustaining dividend payout among the firms.

Keywords: Corporate Governance, Firm Life Cycle Theory, Dividend Policy, Non-Financial Firms, System GMM

JEL CLASSIFICATION: G14, G32