RELEVANCE OF DIVIDEND PAY-OUT AND BORROWING COSTS ON FINANCIAL PERFORMANCE OF QUOTED FIRMS IN NIGERIA

Abstract

Scholars of finance, accounting and indeed management are unanimous in agreeing that funding is critical to the existence of any organization. They are also in accord that there are different sources of funding but perhaps with their own attendant impact on the income of the organization. It is against this that managers are very eagers to increase funding but are always skeptical on the source of the funds. For instance, when organizations borrow fro creditors (loans and overdraft) the implication is that they are under obligations to reimburse the funds with the  accrueds interest which is a charge aginst profit of the year. However, when funds are sourced from the public subscribing to companys share through public offers or private placement, such attracts only dividends which are totally at the discretion of the directors to pay. Following this is that the dividends when paid are non- tax deductible items meaning that tax is paid before dividends are paid. In line with this when the third option of financing is adopted that is by use of retained earnings no obligations falls due on the organization.