Profitability as a Moderator of the Ownership Structure-Dividend Policy Nexus: Quantile Insights from Nigerian Banks

Abstract

This study investigates the moderating role of profitability in the relationship between ownership structure and dividend policy among listed deposit money banks in Nigeria. Anchored in agency and signalling theories, the research evaluates how managerial, institutional, and foreign ownership influence dividend payout behaviour, and whether these effects vary with profitability. Employing balanced panel data from 12 banks between 2012 and 2023, the study adopts fixed effects panel quantile regression to capture distributional heterogeneity and within-firm dynamics often overlooked in mean-based models. The novelty of this study lies in its application of quantile regression to uncover how the ownership–dividend relationship differs across the distribution of dividend payouts, rather than assuming uniform effects. It is also one of the few to model profitability as a moderator in the ownership–dividend nexus within Sub-Saharan Africa’s banking sector, offering sector-specific insights under regulatory and governance constraints typical of emerging markets. Empirical results show that foreign ownership exerts a consistently positive and significant influence on dividend payouts across all quantiles, reinforcing its stabilising role in weak governance environments. Managerial ownership demonstrates a positive effect at lower quantiles, suggesting enhanced alignment with shareholders in lower-paying banks. Institutional ownership has a negative association in pooled regressions but becomes insignificant under fixed effects, indicating contextual variation. Profitability moderates the effect of foreign ownership, weakening its impact at higher profitability levels. However, its moderating influence on managerial and institutional ownership remains weak and inconsistent. These findings highlight the importance of incorporating firm-level heterogeneity and distributional effects in dividend policy analysis. The study advances the literature by integrating ownership structure, profitability, and quantile techniques within a single framework, thereby offering nuanced insights for policymakers, investors, and bank executives seeking to optimise payout strategies in emerging financial systems.