The Effect Of Taxes On Divided Policy Of Banks In Nigeria
[A STUDY OF FIRST BANK OF NIGERIA PLC ENUGU]

1.4 RESEARCH QUESTIONS 

The following research questions will be answered in the course of this study to ascertain the impact of taxes on the dividend policy of banks:

1. Does taxes have any effect on dividend pay-out of banks?

2. Will a change in tax policy lead to a change in dividend policy of firms?

3. Do shareholders ever bother about how earning are distributed? 

4. Do investors and management benefits form taxation? 

5. How can optimal pay-out ratio be determined?

6. Do shareholders influence the pay-out ratio?

7. How does taxation affect dividend policy of banks?

1.5 RESEARCH HYPOTHESIS 

Te following research hypothesis shall be tested in the course of this study: 

H0: There is no significant relationship between taxes and dividend policies of banks in Nigeria.                       

H1: There is a significant relationship between taxes and dividend policies of banks in Nigeria.          

1.6 SIGNIFICANCE OF STUDY

Every research work is expected to be significant in a variety of ways. This one is not an exception. The value attached to decisions involving dividend policy of banks can not be over emphasised. Therefore, management of banks need this information to harmonise the general direction of the firm with a view to achieving the short and long term objective of the firm with regards to dividend payment. In essence, this study adds to the knowledge of managers on the tax measures and their effect on dividend pay-out (policy), of firms. This study is also significant in the following ways:

1. It helps to determine whether taxes are necessary in the development of dividend policy of a firm. 

2. It helps to enhance decision making with regards to how much of the firm’s earning should be distributed and retained in the firm.

3. It indicates the method to be adopted in computing the pay out ratio.

4. Finally, his study contributes to the existing stock of knowledge on the concept of the effect of taxes on dividend policy and will, therefore, serve as a data base for those seeking empirical information on the impact of taxes on dividend pay-out banks in Nigeria.   

1.7 SCOPE OF THE STUDY  

This study has a very wide scope: it is supposes to over all bank in Nigeria but, to carry out a realistic  study on all these banks is a difficult task, unrealistic time consuming and would involve enormous resources financially. Thus, this study is restricted to three selected banks in Nigeria. All inference and deductions are based on the study of these selected banks and conclusions drawn there from.

1.8 LIMITATION OF THE STUDY  

As is always the case in every human endeavours, this research work is not without limitations. Some of these limitations are:

Time: A long time interval is require to carry out and extensive study on all selected banks. The time available to achieve this is too short, making it a major limitation. 

Money: The money available for this research is not sufficient. As a student, to finance this expansive venture was difficult since so much is to be expected. So finance was another major constrain of this study.

1.9 DEFINITION OF TERMS:    

TAX: Compulsory levy imposed by government on the income of individuals and firms to raise funds.

DIVIDEND: The portion of corporate earnings (profit after tax) paid to shareholders of affirm as part of benefits accruable to them (shareholders) for investing their money in the firm. 

DIVIDEND POLICY (PAY-OUT): This is the determination of the earnings to be distributed to shareholders and the amount to be retained in the business (firm) for reinvestment.

PAY-OUT RTIO: This is the ratio of dividend per share to the earning per share of a firm.

It is calculated using the formula

Pay-out ratio (POR) = Dividend per share   X  100

Earning per share