ABSTRACT

This study explores the impact of taxes on the dividends of shareholders in Nigeria. It identify how tax as government policy affects investors shareholders and dividend decisions of companies. The study is significance as it guides financial managers for dividend decisions, as well as direct investors to plan on how to invest and make good returns on investment. Tax, dividend, return on investment, arid earnings per share were used as variables in the study as regression model is adopted to establish relationship between the dependent variables and the independent variable. The population size for the field work conducted for the purpose of the study is fifty (50), as the sample size is ft)urty Four (44) following Taro Yemeni statistical formula. Descriptive approach of data analysis is adopted to analyze the data generated from the questioinaires distributed. Secondary data used in this study were generated from published financial statement of First City Monument Bank Plc, as regression analysis is employed for the analysis of the hypothesis formulated for the purpose of the study. From the study carried out in this research project, the researcher finds out that: Government Policy on Tax strongly affects investors, shareholders, and dividend decisions of companies in Nigeria. The study reveals that a situation where the tax rate, on dividend is on the high side, investors will tend not to in vest their resources in such business, as a result, investment will drastically reduce. Consequently, it is recommended that government should consider the resultant effect that the rate of tax will cause on investment in the economy before passing tax policies on dividend, as unfavourable policies evident in high tax negatively affect the dividends investors receive; a situation that is against wealth creation. Companies should strive to maintain enough liquidity position, so as to be able to meet up with dividend requirements, so as to keep the shareholders' wealth maximization objective alive-shareholders are attracted to companies iii at pay dividend to companies that do not.