CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
In recent years, the role of audit committees in shaping corporate governance and financial reporting practices has gained significant attention in academic and business circles. One crucial aspect under examination is the impact of audit committee size on the dividend payout rate of companies, particularly within the context of the Nigerian cement industry. This study focuses specifically on Dangote Cement, a prominent player in the Nigerian cement sector, spanning the period from 2015 to 2020. The choice of Dangote Cement as a case study allows for an in-depth analysis given its substantial market influence and the importance of the cement industry in the Nigerian economy.
The dividend payout rate serves as a critical indicator of a company's financial health and management's commitment to shareholder value. By investigating the relationship between audit committee size and dividend payout rate, this research aims to contribute to the existing body of knowledge on corporate governance in the Nigerian context. The choice of the specified timeframe, 2015-2020, is deliberate to capture the dynamics during a period that saw economic fluctuations, regulatory changes, and evolving market conditions in Nigeria.
To provide a robust foundation for this research, a comprehensive literature review will explore existing theories and empirical studies related to audit committees, dividend policies, and corporate governance. By drawing upon reputable academic sources and relevant industry reports, this study aims to establish a theoretical framework that guides the examination of the relationship between audit committee size and dividend payout rate. The findings of this research may offer valuable insights for policymakers, regulators, and practitioners interested in enhancing corporate governance practices in the Nigerian cement industry and beyond.
1.2 Statement of the Problem
The study grapples with the pressing issue of understanding how the size of audit committees influences the dividend payout rates of cement companies in Nigeria, using Dangote Cement as a case study over the period 2015-2020. Despite the widely acknowledged importance of audit committees in upholding corporate governance standards and ensuring financial transparency, a gap exists in the current literature regarding their specific impact on dividend distribution strategies within the Nigerian cement sector. The scarcity of empirical studies focusing on this industry limits our comprehension of the intricate relationships between audit committee characteristics and dividend policies, hindering the formulation of targeted recommendations for enhancing corporate governance practices.
The chosen temporal scope of 2015-2020 is pivotal as it encompasses a period marked by economic fluctuations, regulatory changes, and industry-specific challenges in Nigeria. These contextual factors are likely to have exerted varying pressures on audit committees and, consequently, influenced dividend payout decisions. Therefore, the study aims to shed light on how audit committee size adapts to such dynamic environments and how these adaptations, in turn, impact the dividend payout rates of cement companies, with Dangote Cement serving as a representative case. Addressing this gap in the literature holds significance for investors, regulators, and corporate decision-makers seeking to optimize governance structures in the Nigerian cement industry and beyond.Top of Form
Bottom of Form
1.3 Objectives of the Study
The main objective of the study is to examine the effect of audit committee size on dividend payout rate of cement companies in nigeria (a case study of dangote cement 2015-2020). Specific objectives of the study are:
- 1. To Quantify the Relationship Between Audit Committee Size and Dividend Payout Rate.
- 2. To Investigate the Mediating Role of Financial Performance.
- 3. To Assess the Impact of Regulatory Changes on the Relationship.
1.4 Research Questions
To guide the study and achieve the objectives of the study, the following research questions were formulated:
- What is the statistical correlation between the size of Dangote Cement's audit committee and the dividend payout rate over the period 2015-2020?
- How does the financial performance of Dangote Cement mediate the observed relationship between audit committee size and dividend payout rate during the period 2015-2020?
- How have regulatory changes in Nigeria, particularly those related to corporate governance and dividend policies, influenced the connection between audit committee size and dividend payout rate in Dangote Cement from 2015 to 2020?
1.5 Research Hypothesis
The following research hypothesis was developed and tested for the study:
ho: there is no statistical significant relationship between audit committee size and dividend payout rate of cement companies.
1.6 Significance of the Study
The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:
Firstly, the paper will benefit major stakeholders and policy makers in the Bus admin sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.
Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analysed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organisations used as a case study.
Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.
1.7 Scope of the Study
The study is delimited to DANGOTE CEMENT. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.
1.8 Limitations of the Study
The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.
1.9 Organization of the Study
The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.
Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.
Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis is discussed in this chapter.
Chapter Four highlights data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.
Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.
