Corporate Dividend Smoothing Behaviour and Information Asymmetry: Evidence from Nigerian Firms

Dividend smoothing, whereby firms adjust dividends gradually toward a target payout level rather than tracking current earnings, reflects managerial concern for signalling stability to shareholders in contexts of significant information asymmetry. This study examines the determinants and intensity of dividend smoothing among listed Nigerian firms, using the Lintner partial adjustment model as the foundational empirical framework. Annual panel data from 60 dividend-paying firms on the Nigerian Exchange Group spanning 2015 to 2022 are used to estimate firm-specific smoothing parameters and target payout ratios. The study then regresses smoothing intensity on proxies for information asymmetry including analyst following, institutional ownership concentration, bid-ask spread, and earnings opacity. Additional control variables include firm size, financial leverage, profitability, and investment growth opportunities. The system generalised method of moments estimator is applied to address the dynamic nature of the model and potential endogeneity in the information asymmetry measures. The theoretical framework draws on Lintner's dividend policy model, the signalling hypothesis of dividends, the catering theory of dividends, and the agency theory perspective on payout policy. A key contribution of this study is the construction of firm-specific smoothing speed estimates, which allow cross-sectional variation in smoothing behaviour to be explained by governance and market structure factors. Existing Nigerian literature has applied the Lintner model to aggregate sector data without investigating heterogeneity in smoothing behaviour. This study addresses that limitation and produces findings relevant to investor relations practices, the Securities and Exchange Commission's disclosure framework, and researchers in the dividend policy literature. Keywords: dividend smoothing, information asymmetry, Lintner model, Nigerian Exchange Group, payout policy