Influence of Dividend Policy and Capital Structure on the Financial Performance of Listed Non-Financial Firms in Nigeria

Abstract

Capital structure and dividend policy are crucial aspects of corporate finance and have long been subjects of interest for investors, managers, and researchers. Both capital structure and dividend policy play a significant role in determining how a company finances its operations and returns profits to its shareholders. The study examines the impact of dividend policy and capital structure on the financial performance of 70 Nigerian-listed non-financial firms from 2011 to 2021. The findings show that short-term and long-term debt and dividend policy significantly negatively impact financial performance as measured by ROA. In contrast, short-term, long-term debt, and dividend policy significantly positively impact financial performance as measured by Tobin Q. We recommend that firms exercise prudence when utilising debt to fund assets since an increase in debt that needs to be better managed might shift ownership of a corporation from shareholders to debt holders.

Keywords: dividend payout, capital structure, return on assets