Empirical Study of the Effect of Board Characteristics on Dividend Policy in Nigerian Consumer Goods Companies

Dividend policy decisions are significantly influenced by board characteristics in the agency theory framework, and empirical investigation of this relationship in Nigerian consumer goods companies fills a gap in the domestic corporate finance literature. This study empirically examined the effect of board characteristics on dividend policy among 20 consumer goods companies listed on the Nigerian Exchange Group for the period 2015 to 2022. Board characteristics examined included board size, board independence, CEO duality, female board representation, board financial expertise, and director ownership. Dividend policy was operationalised by dividend payout ratio and the propensity to pay dividends (binary). Panel data Tobit regression and probit regression were employed for the continuous and binary dividend measures respectively. Endogeneity was controlled using the instrumental variables approach. Results showed that board independence had a significant positive effect on dividend payout ratio (coefficient = 0.32, p < 0.01), consistent with agency theory predictions that independent boards reduce agency costs through higher dividend payouts. CEO duality was associated with significantly lower dividend payouts (coefficient = -0.21, p < 0.05). Female board representation was positively associated with dividend propensity (OR = 2.8, p < 0.05). Board financial expertise had a positive but marginal effect on payout ratio (coefficient = 0.14, p < 0.10). The study provides original panel evidence on board-dividend relationships for Nigerian consumer goods companies and recommends the Financial Reporting Council of Nigeria incorporate dividend governance guidance in its corporate governance code revision. Keywords: board characteristics, dividend policy, consumer goods companies, Nigerian Exchange Group, agency theory