Cash flow Practices and Dividend Policy of Listed Health Care Firms in Nigeria

Abstract

The interplay between cash flow practices and dividend policy has posed a significant challenge for businesses seeking to strike a balance between meeting short-term financial obligations, sustaining operational efficiency, and rewarding shareholders through dividend payouts. The main objective of this study was to ascertain the effect of cash flow practices on dividend policy of listed healthcare firms in Nigeria. The research design adopted in this study was ex post facto, secondary data were used and the population of the study was 7 listed health care firms and the entire 7 companies were studied. The ordinary least square regression analysis was used in analyzing the data and the statistical package employed was E-views version 13. The result of the analysis revealed that free cash flow has no significant effect on dividend pay-out of listed healthcare firms in Nigeria; operating cash flow has a significant positive effect on dividend pay-out of listed healthcare firms; investing cash flowshas a significant positive effect on dividend pay-out of listed healthcare firms in Nigeria.Thus, it was concluded that cash flow practices have significant effect on dividend policy of listed healthcare firms in Nigeria.  Based on these findings, it was therefore recommended among others that the management of listed healthcare firms should channel their free cash flows into sustainable investment opportunities rather than using them as sole determinants of dividend policy. It was also recommended that the management of health care firms should efficiently manage their operating cash flows to ensure a stable and predictable dividend payout to foster investors’ confidence and satisfaction.