E ISSN: 2583-049X

International Journal of Advanced Multidisciplinary Research and Studies

Volume 3, Issue 3, 2023

Company Income Tax and Dividend Yield in Quoted Deposit Money Banks in Nigeria: An Empirical Analysis

Author(s): Adekoya Adesanya Augustine, Lawal Babatunde Akeem, Oyetunji Oluwayomi Taiwo


Dividend Policy (DP) is the relationship that exist between retained earnings and dividend pay-out, it is one of the financial management decision. Company Income Tax (CIT) is perceived to adversely affect Dividend Yield (DY) in as much as it reduces the profits available for shareholders. Many researches had been conducted on DP but not many considered the effect of CIT on DY in their study. This study considered the probably influence of CIT on DY in Deposit Money Banks (DMB) in Nigeria. The study adopts ex post facto research design with purposive sampling techniques. Descriptive and inferential statistics were used to analyse data at 5% level of significance. The study revealed that CIT has negative effect on DY, while Profitability (PR) has positive effect on DY with (β1=-0.0003246<0 and β2 =0.0005271>0), respectively. CIT negatively influenced DY in DMB in Nigeria and statistically insignificant (Adj R2=-0.0018, F =0.87; P=0.4210). This suggests that CIT and PR are not significant factors influencing changes in DY of the selected DMB in Nigeria. The study concluded that CIT has negative insignificant relationship while PR has positive insignificant relationship with DY in quoted DMB in Nigeria. The study recommends that DMB dividend policy should be based on bank’s uniqueness which will enhance investment opportunity, this makes CIT a factor to consider in DP. Also, DMB should not neglect tax payment as this would lead to enhanced business environment and better profitability in the long-run.

Keywords: Company Income Tax, Deposit Money Banks, Dividend Policy, Dividend Yield, Profitability, Retained Earnings

Pages: 725-731

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