DIVIDEND PAYMENT AND EARNINGS QUALITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA
DOI:
https://doi.org/10.67199/w83e8643Keywords:
Dividend payment, earnings quality, dividend payout ratio, dividend yield, NigeriaAbstract
This study examines the effect of dividend payment on earnings quality of listed deposit money banks in Nigeria. Specifically, the study investigates the influence of dividend payout ratio, dividend paying status, and dividend yield on earnings quality. The study adopts an ex-post facto research design using panel data obtained from the audited annual reports of thirteen listed deposit money banks in Nigeria over the period 2011–2025. Earnings quality was proxied using discretionary accruals, while dividend policy was measured through dividend payout ratio, dividend paying status, and dividend yield. The study employed descriptive statistics, correlation analysis, and panel regression techniques to analyze the data. Findings reveal that dividend paying status has a positive and statistically significant effect on earnings quality, suggesting that firms that consistently pay dividends are more likely to report high-quality earnings. However, dividend payout ratio and dividend yield exhibit negative but insignificant relationships with earnings quality. The findings support dividend signaling theory and agency theory, indicating that dividend payments serve as credible signals of sustainable financial performance. The study concludes that dividend- paying firms exhibit stronger earnings quality than non-dividend-paying firms among Nigerian deposit money banks. The study recommends that bank managers should maintain sustainable dividend policies supported by genuine earnings performance rather than aggressive earnings management practices. Regulators should also strengthen monitoring mechanisms to improve transparency and earnings reliability within the Nigerian banking sector.
Keywords: Dividend payment, earnings quality, dividend payout ratio, dividend yield, Nigeria.
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