ARSI UNIVERSITY

FACULTY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE (MSc)
ARTICLE REVIEW

THE EFFECT OF DIVIDEND PAYOUT ON PERFORMANCE

EVALUATION EVIDENCE OF QUOTED CEMENT COMPANIES IN
NIGERIA (IKECHUKWU, NOV.2015)

GROUP ASSIGNMENT ON THE ADVANCED CORPORATE FINANCE

(ACFN: 712)

GROUP MEMBER ID/NO

1. HABTAMU DEBELE GS/EX/0156/012

2. TAREKEGN GEZAHEGN GS/EX/0162/012
3. DEJENE SEBOKA GS/EX/0149/012
4. TEMESGEN HAILU GS/EX/0163/012
5. DUNIYA FEYISA GS/EX/0029/011

SUMBITTED TO DR.GURUSWAMY

MARCH.2021

ASELLA ETHIOPIA
Ikechukwu, et al (2015) studied the Effect of Dividend Payout on Performance Evaluation:
Evidence of Quoted Cement Companies in Nigeria. The researchers described the background of
the study setting was the issue of dividend payout that is a very important matter in the current
business environment and more especially on the performance evaluation of firms. Ikechukwu, et
al (2015) also stated that, the dividend payment decisions of firms are the primary element of any
corporate policy which is basically the benefit of shareholders in return for investing their money
in the organization and the successful selection and use of appropriate dividend policy is one of
the key elements of the firm’s performance evaluation.
The problems stated by the researchers were, to know the extent Dividend Payout Ratio (DPR)
affect the Return on Capital Employed (ROCE) of quoted cement companies in Nigeria. To
know Dividend Payout Ratio (DPR) have any effect on the Return of Asset (ROA) of quoted
companies in Nigeria and How are you convinced that Dividend Payout Ratio (DPR) have any
effect on Return of Equity (ROE) of quoted cement companies in Nigeria?
The research gap identified by the researchers were: Companies in developing countries like,
Nigeria have low dividend payout if they pay at all, no model or theory has been developed to
show how a particular dividend payout policy affect share price And A number of studies have
been conducted in Nigeria and other economies on the dividend payout policy and financial
performance of companies. However, the studies produces conflicting result and moreover,
further research has to be done on the effect of dividend payout on the financial performance of
quoted cement companies in Nigeria using more recent data.
The main objective described by the researchers was, to investigate the effect of dividend payout
on performance evaluation of quoted cement companies in Nigeria over the past twelve (12)
years period from 2003 to 2014, and the specific objectives described by the researchers were, to
ascertain the effect of Dividend Payout Ratio (DPR) on Return on Capital Employed (ROCE) of
quoted cement companies in Nigeria. To determine the effect of Dividend Payout Ratio (DPR)
on the Return on Asset (ROA) of quoted cement companies in Nigeria. To identify the effect of
Dividend Payout Ratio (DPR) on the Return of Equity (ROE) of quoted cement companies in
Nigeria. The researchers did not describe the significance of the study explicitly.
The scope of the researchers were used quoted cement factory over 12 years performance at
National level of Nigeria and the researchers were used 4 variables and the researchers
described the limitation of the study was paucity of data.
The literature reviews used by researchers were relevant to the study, because the researchers
presented the theoretical literatures and the empirical literatures clearly in the study. The
literatures used clearly provide basics about the effect of dividend payment on the performance
of organizations and also the many empirical literature clearly stated by the researchers describes
the relationship of the variables.
The variables described in the study by the researchers were relevant to the topic. The
researchers were described the variables in the literature review. The variables described in the
literature review such as; Dividend Payout Ratio (DPR); Return on Capital Employed
(ROCE);Return on Assets (ROA) and Return on Equity (ROE), and also the researchers’
reviewed empirical evidence that suggest relationships between variables.
The researchers formulated three hypothesis for the variables used that:
H1: There is no significant effect of Dividend Payout Ratio (DPR) on Return on Capital
Employed (ROCE) of quoted cement companies in Nigeria.
H2: Dividend Payout Ratio (DPR) has no significant effect on Return on Asset (ROA) of quoted
cement companies in Nigeria.
H3: Dividend Payout Ratio (DPR) has no significant effect on Return on Equity (ROE) of
quoted cement companies in Nigeria.
To conduct the research, the researchers were used Secondary data were obtained from the
financial statements (Statement of Comprehensive income and Statement of Financial Position)
of the selected quoted cement companies in Nigeria on Nigerian Stock Exchange. The
researchers used four (4) out of six (6) of quoted cement companies as sample. The model
specification for the analysis of data is ordinary least squares techniques applied as panel
estimation while descriptive research method and simple linear regression for the analyses.
The researcher’s results and discussion were based on the stated objectives. The results showed
that: Dividend Payout Ratio (DPR) has positive relationship with all the dependent variables
(Return on Capital Employed, Return on Assets and Return on Equity) used for this study,
Dividend Payout Ratio (DPR) has statistically significant with Return on Capital Employed
(ROCE) and Return on Asset (ROA) while DPR has statistically insignificant with Return on
Equity (ROE) of quoted cement companies in Nigeria and Dividend payout ratio (DPR) has
statistically effect on Return on Capital Employed (ROCE) and Return on Assets (ROA) of
quoted cement companies in Nigeria while DPR has no statistically effect on Return on Equity
(ROE) of quoted cement companies in Nigeria.
The conclusions of the study aligned with the findings. Because, the researcher stated all the
conclusions from each finding of the study is a concise and precise ways in the study. Thus, the
researcher reached the conclusions that aligned with the findings based on the findings of the
research.
Based on the findings the researchers tried their best to recommend in association with the
conclusions and findings that: the management should improve on their Return on Assets (ROA)
and Return on Equity (ROE) as they are of great important in the valuation of performance
evaluation of quoted cement companies in Nigeria; adopt optimal dividend policy that would
better the lots of shareholders both in the short-run and long-run; devote adequate time in
designing a dividend policy that will enhance firm’s performance and shareholder value and
adopted good dividend payout policies in order to reduce agency cost and maximize the value of
the company and attract more investors. The researchers were followed the standard form of
referencing.
Our overall comments on the issues of article, the strengths of the study includes, the researchers
selected a research topic which is relevant to the study, the abstract and background of the study
described with relevant literature review, identified the research problem, enumerated the main
objective and specific objectives, The literature review was relevant to the study, The variables
were relevant to the study and described in the literature review and also hypothesis formulated
for the variables. The researchers used secondary data and descriptive statistics and linear
regression to analyses data. The results and the discussion of the researcher were in the context
of the stated objectives. The conclusions and results of the researchers were aligned with the
finding and discussion and finally the researchers based on the findings recommend in
association with the conclusions and finding of the study.
But there were major weakness of the study such as the significance of the study was not clearly
stated; the scope of the study was at the national level it indicate a few limitation description. In
addition to this the weaknesses of the researchers were, the sample size of the study was small,
the study was based only secondary data and the significance of the study was not sated.