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Working Paper 250- Quality of Corporate Governance on Dividend Payouts: The Case of Nigeria


In advanced economies, only firms who have relatively grown in size and need more capital for operations approach capital markets for finance, implying that their ownership would be diffused and enlarged. To attract more investors, corporate governance standards that could protect the interests of shareholders need to be enforced (Kowalewski, Stetsyuk and Talavera, 2007). This phenomenon is relatively new in Nigeria, since firms, formerly owned by colonial allies and administrators were transferred to some Nigerians as a result of the indigenisation policy of 1970s. Another major economic transition in the economy in the last three decades (1980’s) is the privatisation (an offshoot of Structural Adjustment Programme--SAP) of public enterprises. Privatisation is a programme of divestiture of public enterprises introduced within the framework of macroeconomic reforms. It is one of the International Monetary Fund’s (IMF) policies to bail her out of economic crisis. It was meant to reduce absolute reliance of commercially oriented parastatals on the treasury for funding and to encourage them to approach the stock market for capital. This reform has made ownership of public limited liability companies in Nigeria, highly concentrated.

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