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PRODUCTIVITY IMPACT OF DIVIDEND ON SHAREHOLDERS

CHAPTER ONE

INTRODUCTION

1.1. Background of the study

The dividend of shareholders and its impact on productivity has been severally been called into question. Most school of thoughts has it that dividend of shareholders does not have a significant impact on their productivity level while other school of thoughts are of the contrary opinion. Dividend overtime has hada leading role to play in corporate organizations and more especially in the wellbeing of shareholders. Dividend off course helps to is increase or improve the revenue base of shareholders, corporate monetary managers make different financial decisions and dividend policy decision is cardinal amongst them (Baker &Powell 1999) . Dividend decision has great impact on firm financial decision and stock price and most importantly on its shareholders; increase in dividends would improve the revenue base of its shareholders while a decrease in dividend would be on the contrary as their financial base would be negatively affected. Simians (1995) argue that the productivity of shareholders is largely influenced by the organization’s dividend policy. It is an approach which is used to distribute the profit back to its shareholders. If a company is in a growing stage, it may decide it will be reinvested in company’s future projects rather than distributing the profit to shareholders .If a company decides to pay dividend, it must decide how much and at what rate dividend should be paid. Dividend policy plays a frontline role to play in terms of the commitment and corporate productivity of its shareholders. If a company pays handsome return to its shareholders it will help to improve the productivity of its shareholders thereby ensuring corporate growth of the company and vice versa. So we can say dividend policy have a strong impact on growth and productivity. Dividend policy is guidelines for financial managers, how to pay dividend to the shareholders either through cash dividend or through fixed percentage dividend. The primary objective of any organization is to maximize the wealth of shareholders. Financial manager’s aim is to take a decision in such a way that shareholders receive the high contribution of dividend which leads to increase the price of share. Because market price is an indicator of profitability, progress and productivity of both the shareholders and company by extension, however, it is an unresolved issue whether the dividend policy has impact on its shareholders wealth. 
1.2. Statement of the problem 
The problem of productivity in corporate organizations especially when it comes to employees has overtime been a puzzle. This is as a result of the general problem of less productivity on the part of employees and this has negatively affected the corporate growth of companies. Overtime in Nigeria, shareholders dividend has witnessed a negative trend of continual retrogression due to the harsh economic situation of Nigeria. A major offshoot of this malady has led to shareholders not giving their best as a result of lack of financial motivation. This has negatively further affected the economic development of Nigeria.
1.3. Objectives of the study 
The following would be the aims and objectives of venturing into this study. 
1. To examine the impact of dividends on shareholders productivity. 
2. To know the impact of prompt payment of dividend on the growth of an organization. 
3. To examine the relationship between shareholders productivity and dividends. 
4. To recommend ways of improving shareholders productivity in Nigeria 
1.4. Research Questions 
The following would guide us as our research questions 
1. What is the impact of dividends on shareholders productivity?
2. What is the impact of prompt payment of dividend on the growth of an organization? 
3. What is the relationship between shareholders productivity and dividends? 
4. Can shareholders productivity be improved through payment of dividends? 
1.5. Research Hypothesis
H0 : Dividends do not significantly influence shareholders productivity. 
H1 : Dividends significantly influence shareholders productivity. 
1.6. Significance of the study
This study would be of immense benefit to corporate organizations in terms of the pros and cons of dividend policy and how it relates or affects shareholders. This work would equally be beneficial to government at all levels, students and researchers who are interested on the impact of dividends on shareholders productivity. 
1.7. Scope and of the study
This work is restricted to the productivity impact of dividends on shareholders with dangote cement plant Lagos serving as a case study.

Limitation of the study

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

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