Research Article

Moderating Effect of Research and Development (R&D) on the Relationship between Dividends Policy and Firm Performance of Consumer Goods Firms in Nigeria (2018 -2022)

Abdulrazaq Suleiman Ibrahim1*, Mukhtar Shehu Aliyu2, Rubina Jabeen3
1 Department of Business Administration, Faculty of Management Sciences, University of Maiduguri, Borno State, Nigeria.
2 Bayero University Kano
3 Department of Business Administration, Comsats University, Pakistan
* Corresponding author: abdulrazaqsuleimanibrahim@femsbukjournals.org.ng
Published: Nov, 2023
DOI: 10.67894/bbr.2023.8gg5p6c3
Pages: 138-163
Views: 10
Downloads: 4

Abstract

A company's success benefits all stakeholders, including customers, workers, and creditors. Nigeria's challenging business climate has led to many large corporations adopting low payout strategies, with high payouts causing slower growth and lower market prices. This study aims to examine the moderating effect of R&D expenditure on the relationship between dividend policy and firm performance in Nigerian consumer goods companies listed on the Nigerian Stock Exchange (2018 to 2022) using panel data. The sample size of the study is made up of nine (9) companies, which is determined using filtering sampling criteria. Dividend payout ratio (DPR), dividend yields (DY), and dividend coverage ratio (DCR) is used as proxies of dividend policy and ROE for firm financial performance. STATA version 17 is used in the study for both inferential and descriptive statistics. The study finds a significant positive relationship between dividend pay-out ratio, coverage ratio, and ROE, while a statistically insignificant relationship is found between dividend yield and ROE. It further reveals a negative significant moderating effect of R&D expenditure on the relationship between Dividend payout ratio (DPR), dividend coverage ratio (DCR) and ROE, but found no significant moderating effect of R&D expenditure on the relationship between dividend yield (DY) and ROE. The study concludes that R&D expenditure has a negative moderating effect on the relationship between dividend policy and financial performance of consumer goods companies in Nigeria. It is recommended that companies should balance short-term profitability with long-term growth potential when making R&D investment decisions. Capital structure and dividend policy decisions should also be considered, considering factors like industry characteristics, ownership structure, and macroeconomic conditions. 

Keywords

R&D Expenditure Dividends Policy Firm Performance Consumer Goods Companies Nigeria.

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How to Cite

Ibrahim, A. S., Aliyu, M. S., & Jabeen, R. (2023). Moderating Effect of Research and Development (R&D) on the Relationship between Dividends Policy and Firm Performance of Consumer Goods Firms in Nigeria (2018 -2022). Bayero Business Review, 7(2), 138-163. https://doi.org/10.67894/bbr.2023.8gg5p6c3

A. S. Ibrahim, M. S. Aliyu, and R. Jabeen, "Moderating Effect of Research and Development (R&D) on the Relationship between Dividends Policy and Firm Performance of Consumer Goods Firms in Nigeria (2018 -2022)," Bayero Business Review, vol. 7, no. 2, pp. 138-163, November 2023. doi: 10.67894/bbr.2023.8gg5p6c3

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