What type of study is this?

This is a Observational study (also classified as: Panel data regression).

September 10, 2025

Effect of Cashflow Management on Dividend Policy of Listed Manufacturing Firms in Nigeria

NDNentawe Nengak DeshiPlateau State University KUKhadija UduPlateau State University

Key Points

Investment cash flow significantly affects dividend policy in listed manufacturing firms in Nigeria.
Both operating cash flow and financing cash flow have no significant effect on dividend payouts.
The study utilized panel data regression models to analyze cash flow effects on dividends.
Recommendations include aligning investment and dividend planning to enhance operational effectiveness.

Abstract

Cash flow management of a firm is linked to smooth dividend policies, however, listed manufacturing firms in Nigeria demonstrate an inconsistent and erratic flow of dividend payment on the bases of the low degree of operating environment stability and variability of cash flows. This study analyzed the effect of cash flow management (Operating Cash Flow, Investment Cash Flow and Financing Cash Flow) on dividend policy of manufacturing firms in Nigeria listed in the stock market. The research design used in the study was quantitative research based on the quasi-experimental and ex post facto research design. The population included in this study is 57 manufacturing companies listed in the Nigerian Exchange whose 44 firms were purposively selected due to the availability of data between 2014 and 2024. Secondary data was obtained through audited financial statements as well as Nigerian Exchange Group. Panel data regression models with fixed effects were used to analyse data after diagnostic tests of heteroskedasticity, multicollinearity, and stationarity, using STATA 17.0 software. It was found that the Operating Cash Flow (with a coefficient of -0.5754 and p-value of 0.882) and Financing Cash Flow (with a coefficient is 9.2827 and a p-value of 0.348) have no significant effect on the dividend payout, whereas Investment Cash Flow positively and significantly (with a coefficient of 2.9179 and a p-value 0.000) affects the dividend policy of the listed manufacturing companies in Nigeria. The study concluded that investment cash flows rather than operational or financing cash flows determine the dividend policy in the listed manufacturing companies in Nigeria. The study recommends that companies should match the investment plans with the dividend planning and should enhance operational effectiveness to increase dividend capability, whereas implementing steady financing practices should be followed to maintain the long-run shareholder worth.

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