Incidence of Unclaimed Dividends: A Panel Data Analysis of the Role of

Quoted Companies in Nigeria

EMOAREHI ERIKI, FRANCIS O. IYOHA, DORCAS ADETULA

Department of Accounting, Covenant University, Ota, Ogun state,

NIGERIA

Abstract: - The objective of this paper is to examine the incidence of unclaimed dividends and the role of quoted

companies in Nigeria. The rising trend of unclaimed dividends has been a serious concern to government,

stakeholders, and supervisory authorities like the Securities and Exchange Commission, (SEC), and Nigerian Stock

Exchange (NSE). There has been some policies put in place to reduce unclaimed dividends over the years. Some

of the policies and measures include Companies and Allied Matters Act (CAMA), Investment and Securities Act

(ISA), Central Securities and Clearing System (CSCS), Bank Verification Number (BVN), and e-dividend payment

system respectively. Despite, these measures, unclaimed dividend figures have risen from 30 billion Naira in 1996

to 130 billion Naira in 2017. Studies done to address unclaimed dividends attributed various factors, some of which

are: investors not giving their correct addresses, non-delivery of dividend warrants to investors, and Registrar not

doing their work. However, one area that has not been addressed is the role of quoted companies in the rising trend

of unclaimed dividends in Nigeria. Some large quoted companies have set up registrars but are really departments,

with no separate boards from the mother firm. In Nigeria, registrars are statutorily charged with the processing of

dividends from the time a quoted firm declared dividends and when the dividends fund is finally transferred to the

registrars in Nigeria. But an emerging trend that has not been addressed is that quoted companies are now

warehousing unclaimed dividends as reported by the reports of Securities and Exchange Commission (SEC). In

other words, the dividends that have been declared and paid are still held and managed by the same quoted

companies that paid the dividend. It is this trend that has prompted SEC to make proposal to the National Assembly

for the review of CAMA law, to prevent quoted companies from exploiting the law. The quoted firms hitherto took

advantage of the loop hole in CAMA to manage their already declared and paid dividends, months after payment

through their owned established registrars. Though, about six shareholders associations have rejected the

intervention of SEC in unclaimed dividend issues. But one of the principal functions of the SEC is to ensure is

investor’s protection. It is against this background that the study investigate the quoted companies as a

contributory factor in the rising trend of unclaimed dividends in Nigeria. The study used panel data analysis to run

the quarterly data of unclaimed dividends amount with the quoted companies, the unclaimed dividend amounts

with the registrars responsible for managing dividends, and the aggregate unclaimed dividends amount from 2012

to 2019. The study found that there was no difference between the role of quoted companies and the registrars in

terms of managing unclaimed dividends in Nigeria. The study recommends a review of government policy that

will continuously audit and sanction quoted companies that manage the unclaimed dividends through their

subsidiaries or registrars and use it as working capital.

Keywords: shareholders, Nigerian stock exchange, quoted companies, Unclaimed dividend, company registrars.

Received: May 22, 2022. Revised: August 5, 2022. Accepted: August 26, 2022. Available online: September 15, 2022.

1 Introduction

The history of unclaimed dividends dates back to

early 1970s when Nigeria pursued a policy of

indigenization of its companies. Many Nigerian

investors took undue advantage to buy shares of most

quoted companies that were affected with fictitious

names and addresses. There was little or no means of

detecting these anomalies. The result of this led to

the rising figures of unclaimed dividends in Nigeria.

The incidence of rising unclaimed dividend volume

and value in Nigeria have remained the major capital

market issues that have continued to dominate the

financial and accounting sectors till date.

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From 1986 to 1996, for example, the figure of

unclaimed dividends stood at N4 billion, from 1996

to 2006 it increased to N40 billion, Owolabi and

Obida [1], from 2006 to 2016 it rose to N80 billion

and as at 2018 it stood at N130 billion, and still

counting, Olowokeere [2]. There have been efforts

policies made by government to address the rising

trend of unclaimed dividends in Nigeria. They

include, setting up the Companies and Allied Matters

Act of 1990,( which was reviewed in 2004), the

introduction of Central Securities and Clearing

System (CSCS), the establishment of Investment and

Securities Act of 2007, and recently, the introduction

of e-dividends payment system. This is in addition to

the introduction of Bank Verification Number

introduced to capture the profile of Nigerians that

have anything to do with banks. Despite these

measures, a lot of arguments have been put forward

as to how to deal with the rising unclaimed dividends

in Nigeria. This problem had attracted the attention

of the National Assembly for the past 10 years, and

had led to a proposal by the National Assembly to set

up a committee to manage the unclaimed dividends

but this was rejected by the Shareholders`

Association of Nigeria. Many stakeholders have

taken different positions in terms of what causes the

rising trend of unclaimed dividends and how the

rising unclaimed dividends could be resolved. There

are existing extant laws that guide the treatment of

dividend payments and unclaimed dividends in

Nigeria. Specifically, the Companies and Allied

Matters Act ( CAMA) of 1990, Investments and

Securities Act (ISA) 2007, had made provisions for

investment and how unclaimed dividends should be

treated. In 2006, the Securities and Exchange

Commission, SEC, proposed to the National

Assembly to establish the Unclaimed Dividend Trust

Fund (UDTF), but this was rejected by the National

Assembly. This opened the gate for the argument for

and against management of unclaimed dividends in

Nigeria among SEC, shareholders associations, and

the quoted companies themselves.

The Companies and Allied Matters Act (CAMA)

1990, states that dividends which remain unclaimed

after fifteen months of being declared are supposed

to have been returned to the company from which the

beneficiary/investor may make a claim not later than

twelve years afterwards. It was this provision that

SEC made a fresh proposal in 2017, to establish a

Nigerian Capital Market Development Fund,

NCMDF to the National Assembly as follows: that

Pursuant to the provisions of Section 313(1)(n) of the

Investments and Securities Act (ISA) 2007.

companies and registrars in custody of dividends

which remain unclaimed by shareholders for 12

years, after the date of declaration or subsequently

attain the 12 years threshold, shall upon the coming

into effect of this rule, transfer such monies into the

coffers of the Nigerian Capital Market Development

Fund (NCMDF). The proposal also stated that all

companies and registrars shall not later than 30 days,

after the end of every calendar year, forward to the

Commission a report of unclaimed dividends in their

custody. Companies shall disclose details of

compliance in their annual reports, Egwuatu [3]. The

main argument of SEC was that most unclaimed

dividends are being used as working capital by

companies contrary to CAMA’s provision, that it

should be invested outside the company. Dividends,

once declared, belonged to shareholders and should

not be ploughed back into the companies. SEC

believes that with such free money, it would distort

the company’s actual financial position and make

their performance measurement very difficult. And

when such quoted firms fail or are liquidated, the

investors would not be able to claim their dividends

and the dividends were not being managed by the

registrars. This practice has negative implications for

market growth and development. SEC further

argued that the bulk of the unclaimed dividends that

are more than 12 years belongs to people who are

dead; multiple applicants who do not have bank

account in their names, or small amounts of money

that is not worth claiming. Someone that has not

claimed his or her dividend in 12 years is unlikely to

do so. And that since such unclaimed dividends are

statute barred, and thus forfeited by the shareholders

in accordance with sections 379 – 386 of CAMA.

Sections 379-386 states that: (a) Where

dividends are returned to the company unclaimed, the

company shall send a list of the names of the persons

entitled with notice of the next annual general

meeting to the members. (b) After the expiration of

three months’ notice, the company may invest the

unclaimed dividend for its own benefit in an

investment outside the company and no interest shall

accrue on the dividends against the company. (c)

Such dividends are to be regarded as special debts

due to and recoverable by shareholders within 12

years and actionable only when declared. This was

the lacuna that the firms exploited and which SEC

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hinged its proposal for the establishment of a trust

fund.

On the other hand, all the six shareholders

associations in the capital market disagreed with

SEC. They argued that once dividend has been

declared and paid by the companies it becomes the

rights of the shareholders, it should not be used for

any purpose. The Standard Shareholders

Association of Nigeria, (SSAN) wondered why SEC

should be interested in shareholders’ money when it

does not protect their interests. And why it would not

use its own fund to develop the capital market, that

most funds managed by government in the past were

misappropriated or mismanaged.

Renaissance Shareholders Association of Nigeria

argued that CAMA has already made adequate

provision for the treatment of unclaimed dividends;

even the volume of unclaimed dividend is

insignificant with most of these already statute

barred.

Independent Shareholders Association of Nigeria

(ISAN) argued that the money involved is not

public money but private investors’ money and that

because government does .not respect private sector’s

money, it will be mismanaged. Furthermore, even if

the fund were to be allowed to be used for other

purpose other than it being paid to the owners, the

composition of the Board member of the Fund will

not reflect representative of the entire stakeholders.

And that since most investors used their hard earned

money to invest, 12 years is enough to track down

someone’s investment.

Progressive Shareholders Association of Nigeria

(PSAN), argued that this area of unclaimed dividends

still remains a no-go-area. The unclaimed dividends

belong to the shareholders and must remain with the

companies until the amendment of the law. The

stock of unclaimed dividends would continue to

increase unless Section 383 of Companies and Allied

Matters Act (CAMA) were amended. The issue of

unclaimed dividends would be resolved once

shareholders are allowed to claim their dividends at

any given time. They argued that the duty of SEC

should be to ensure market vibrancy, not

threatening investors’ confidence, that SEC should

avoid over –regulation of the market, as over -

regulation was going to kill the market, and that

SEC should concentrate more on increasing retail

investors’ participation to avoid the experience of

2008 near market- crash.

Nigeria Shareholders Solidarity Association

(NSSA), argued that the entire stock of unclaimed

dividends belonged to shareholders and not the

Federal Government nor its agency. That SEC

therefore should look at the problems of the

unclaimed dividends critically and not on ways to

disburse the funds. That SEC should come out with

reforms aimed at addressing the problems of

unclaimed dividends and stop looking at how to

spend the money.

Some quoted firms also mobilised their shareholders

to reject SEC proposal even though unclaimed

dividend had risen to over N80 billion. They argued

that the quoted firms were comfortable with the

existing CAMA provision, and were in agreement

with the shareholders stand who were ready to resist

SEC proposal. In the midst of this unclear positions,

in 2019, SEC introduced the e-dividend policy. Eboh

[4]. In all of these arguments, it must be noted that

the registrars don’t have direct interface with

shareholders, but only payment of dividends to

investors. But the Registrars are statutorily

established to manage the payment of dividends to

shareholders once the quoted companies have

declared dividends. Once the companies have

declared the dividends, they pay the dividend funds

to the registrars, which in turn pay the shareholders

by means of dividend warrants. This functions are

clearly restricted to the registrars. They are to

function according to the extant laws stipulated in

CAMA as stated above. Despite all these measures,

proposal, argument for and against some measures,

the trend of unclaimed dividends was still on the

increase.

2 Materials Studied and Area

Description

Over the years, there have been tremendous increases

in the amount of unclaimed dividends in Nigeria.

There is a listing requirement for companies to be

quoted on the Nigerian Stock Exchange (NSE). One

of the requirements is that shareholders must receive

their dividends when declared according to their

shareholdings and so the possibility of unclaimed

dividends would be minimal. However, this has not

been the case in Nigeria. Unclaimed dividend has

assumed a rising dimension that has called for

concern.

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Many analysts have adduced many reasons for

unclaimed dividends in Nigeria. Kighir [5], and

Akhter [6] analyzed dividend payout and unclaimed

dividends in Nigeria and attributed rising unclaimed

dividends to some factors which include: the

shareholders, the quoted companies, companies

Registrars, and the regulatory authorities themselves.

Other reasons adduced are the lack of postal services,

investors changing their addresses without notice to

registrars, and the Indigenization decree of 1972,

when some investors used fictitious names to buy

shares which later could not claim their dividends.

The Companies and Allied Matters Act (CAMA) [7],

Section 382, subsection (1), and Corporate

governance code (2018) state that the decision to pay

dividend rests on the board of directors of companies,

and the legal position of unclaimed dividend is that

after 15 months, unclaimed dividends are expected to

be returned to the company from which investors or

beneficiaries will make claim not later than twelve

years afterward. The implication of this is that

dividends declared by any large quoted companies

that has its own established registrar can still retain

its funds as working capital, thus playing the role of

the registrar. Registrars that are independent do not

have this advantage. From the above, there is an

unexplained lacuna between the rising pattern of

unclaimed dividends and the quoted companies in

Nigeria today which has been ignored or not

investigated. This is the focus of the study.

In recent time, efforts have been made by the

Federal government to stem the tide of increasing

unclaimed dividends pattern by introducing the

Central Security Clearing System CSCS), and

thereafter, the e-dividend payments by firms to their

shareholders. Despite these efforts, the amount of

unclaimed dividends was still on the increase. Many

investors, especially the low-level investors would

lose their returns on their investments and could

discourage potential investors in Nigeria. This could

erode confidence in the capital market and could

have a debilitating effect on the Nigerian Stock

Exchange.

The establishment of in house Registrars by some

large companies as subsidiaries, and the fact that

companies now warehouse unclaimed dividends

instead of registrars, who are authorised to do so in

the first instance has created a lacuna in determining

the causes of rising unclaimed dividend in Nigeria.

This gap has not been completely explored

This study covers the aggregate quarterly amount of

unclaimed dividends, the amount of unclaimed

dividends with the registrars, and the amount of

unclaimed dividends with the companies that paid the

dividends between 2012 to 2919, after the statutory

period allowed for dividends to become unpaid.

There is an emerging data pattern in unclaimed

dividend figures reported by SEC which showed that

unclaimed dividends amount have been with the

quoted companies for some years. In other words,

both the companies themselves and the Registrars

have unclaimed dividends written against them,

either by default or intentionally. This has to do

with the involvement of quoted companies with

unclaimed dividend when all dividends ought to be in

the records of the Registrars for at least one and a

half years. There is therefore, need to examine the

role of quoted companies in the rising trend of

unclaimed dividends in Nigeria.

3 Research Questions

The study specifically seeks to provide answers to

the following research question: what is the impact of

unclaimed dividends with quoted companies on the

aggregate amount of unclaimed dividends in Nigeria?

4 Objective of the Study

The objective of this study is to determine the impact

of unclaimed dividends with quoted companies on

aggregate unclaimed dividends in Nigeria.

The few researches that have been done in this

area identified reasons for the rising unclaimed

dividends in Nigeria Among the reasons adduced are

ineffective postal services in Nigeria, issues of

multiple applications for shares, and uninformed

investors Osamwonyi and Osarobo [8] attributed the

problems of unclaimed dividend to the parties

involved in the process of dividends payment and

receipts: shareholders, institutions, the stockbrokers,

and lapses on the part of the registrars. Similarly,

Suleyman [9] identified the problems to be

multidimensional and associated the problem of

unclaimed dividend on the part of the shareholders,

the companies, the stock brokers and most especially

the registrars. The study further claimed that some

company registrars deliberately deny investors their

benefits through various schemes.

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The major concern is that many shareholders

especially the small investors are not getting their

dividend from their investment. This is happening

despite the fact that the Securities and Exchange

Commission (SEC) had introduced the Electronic-

Dividend Mandate Management System (E-DMMS)

in collaboration with the Central Bank of Nigeria

(CBN), Nigerian Interbank Settlement System

(NIBSS), with other stakeholders. According to

Olowokeere (2) shareholders Association of Nigeria

has argued that both companies and the Registrars

have deliberately slowed down the process of the e-

dividend system. According to the shareholders,

registrars employ tactics of selective payments and

distribution of electronic dividend (e -dividend)

while exploring loopholes in the rules and

enforcement by SEC. They argued that among other

requirements, the registrars ask for a bank account,

official identity card, signatures, and utility bills, in

filling the Know Your Customer (KYC) form. They

further explained that the argument was the differing

ways registrars and shareholders embraced e-

dividend initiative which is a major concern to

investors. The information demanded by registrars

are already contained in investors Bank Verification

Number (BVN), which are already with the

stockbrokers, where they bought their shares and

who are the custodians of the information. They

wondered why an investor is tossed from one end to

another when it comes to dividend payment,

Olowokeere [2].

Many studies have focused on the problems of

unclaimed dividends generally and made

suggestions. Opara and Emenike [10] opined that the

most important policies in corporate findings are

dividend policy because shareholders normally

utilize their resources while corporate managers use

the dividend to send profit or signal to the capital

market. Osaze and Anao [11] gave two major reasons

for the payment of dividends. The first reason is that

the payment of dividend sends a signal to investors in

the capital market and it creates an impression that

the company is doing well, and will likely continue

in the future. If a company decides to pay out

hundred percent dividends without any reserve, it

creates a negative signal to investors and the general

public because it may seem as if the company lacks

investment ideas and this would eventually bring

down the company’s stock price. Another reason is

that most investors believe in investing with a

company that has a high dividend payout ratio so that

the investors can receive regular rewards for their

investments.

Hence in Nigeria, investors are dividend –driven,

Osaze, Osamwonyi and Tafamel [12] and this has

created a lot of worries to the regulatory authorities

(Securities and Exchange Commission and Nigerian

Stock Exchange (NSE), company registrars, and the

company’s executives. If dividend remains

unclaimed in a company, it may erode investors’

confidence in the affected companies. Unegbu [13]

argues that if dividend declared remains unclaimed

after so many years, it could become a disincentive to

investment and may erode investors’ confidence.

5 Concept of Unclaimed Dividends

Dividends are distributable earnings of a company

from the operation in one year, and dividends not

distributed could be regarded as retained earnings.

The decision on whether to distribute dividends lies

in the hand of the board of directors of companies.

Olowe [14] stated that dividend is a taxable income

of payment declared by the board of directors to

shareholders, and the payment could be quarterly or

yearly depending on the type of company. Payment

of dividend maximizes shareholders wealth, and

dividend not claimed by shareholders or investors

give rise to the issue of unclaimed dividends.

Dividend declarations are made by quoted companies

and dividends are paid by the registrars of the

respective companies to the respective shareholders

Osaze and Anao [11]. Dividend, therefore, is a

product of the financial accounting and auditing

processes undertaken by the company registrars to

ensure that all investors whose names are in the

registers of the firms, as at the date of payment of

dividends, receive their dividends appropriately when

due. When this is not done transparently, there is

bound to be unclaimed dividend issues. The financial

statement of a company is the reflection of the

company’s shares. When there is improvement or

update on a company’s bank account, it can help in

adjusting unclaimed dividend, because it wills also

reflect in the financial position of the company

concerned, Unegbue [13]. This does not only benefit

the stockbrokers but also the people in the

environment because the number of shares a

company owes is the reflection of the company’s

own worth or value.

However, there are three financial decisions a

company must undertake, among these decisions are

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dividend policy, financing policy, and investment

policy. The dividend policy adopted by a firm

determines the amount to be paid to shareholders as

dividends, which is very instrumental in achieving

the objectives and profit of shareholders wealth

Ekwueme and Ezelibe [15] Dividends are vital to

both companies and investors. The importance of

dividend explains why the issue of unclaimed

dividend is persistent. Registrars of companies are

expected to be a vital organ of the company’s

management policy to maximize shareholders wealth

and also create a sustainable dividend policy.

Dividend could be broadly known as returns on

investment in financial assets. The investors usually

expect a reward from their investment and this

reward comes in the form of a dividend. Normally, a

warrant is issued to investors and not all investors

receive their warrants. Warrants not received

becomes an unclaimed dividend. The issue of

unclaimed dividend has been existing in Nigeria and

the factors that give rise to unclaimed dividend

include change of address without proper

communication, death without proper information,

loss of dividend warrant by investors, lack of

awareness on the part of the general public among

others. Although, there are speculations that

companies and registrars are now beneficiaries of

unclaimed dividends, and this has created more

concern on the part of investors. To what extent this

is true is yet to be verified. This is the main thrust of

the paper.

The issue of unclaimed dividends is not peculiar to

Nigeria alone. Some countries have made adequate

provisions for the appropriation of unclaimed

dividend. An example of such a country is Kenya.

According to Kirimi [16], unclaimed dividend assets

amounted to 148 million shillings in 2009, 384

billion Shillings in 2010, and to 573 billion

Shillings, in 2011 respectively. And the

government of Kenya to introduced an Appropriation

Bill in Parliament, which was called unclaimed

financial assets authority board, to carry out

unclaimed financial assets. The bill was passed and

sent to the President but the Parliament that deals

with this bill abandoned the property.

In the United Kingdom, the unclaimed dividend was

properly estimated between 15 billion pounds and 20

billion in 2012 and 2013 respectively. And in

Malaysia, the 1965 Act that governs the

administration of unclaimed dividend presents a

claim to company registrars for payment of

unclaimed dividend and when the dividends are not

claimed after one year, it is expected that the

shareholders reapply to the registrars, Okpaleke,

Emele and Gambo [17]

According to Akinkugbe [18] the issue of

unclaimed dividend has been prevalent in the

Nigerian stock market. The investors, shareholders

are interested in the issue despite the effort made by

regulatory agencies, but integrity seems to be the

prevailing question in the management of unclaimed

dividend. Odejayi [19] further explained that a bill

was being passed to manage the increase in

unclaimed dividend but this bill did not pass because

of the concerns of the investing public. And this has

constituted to be a serious problem to both

shareholders and investors because the distribution of

earnings forms part of public expectation. Dividend

decision has to do with the firm’s ability to decide a

certain amount that will be given to shareholders.

This will enable the firm to actualize the objective of

profit and shareholder’s maximization. The major

problem of unclaimed dividend can be traced as far

as 1972 to 1977 during the period of indigenization.

Records were not properly kept during this period;

the issue was addressed with the provision of CAMA

1990. Several other reasons that contributed to

unclaimed dividend in Nigeria include delay in postal

services, change in address of house location by

investors, and poor identification of house number of

streets, failure to effect changes in shareholders

account, mistake as a result of commission or

omission, and failure to post dividend warrant to

shareholders in other to manipulate figures by

registrars.

6 Management of Unclaimed Dividend

in Nigeria

Many reasons have been advanced for the rising

amount of unclaimed dividends over the years. It

ranges from legal issues to the problem of corporate

governance issues Unegbu [13]. Arising from this

increase of unclaimed dividends, most companies

usually declare non-cash backed dividends and get

away with it, the declared dividends are not

immediately taken off. Companies now tend to

present a false impression in their annual report

performances and misinformed investors as well as

the general public, Unegbu [13]. Other issues on

corporate governance are those that relate to

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operational mechanism of registrars and unclaimed

dividends. There is a conflict of interest between

public companies and registrars due to some benefits

at the expense of the shareholders because these

interests are not transferred to the shareholders. Most

times, companies make piecemeal dividend payment

to investors after the dividend has been declared.

This is because the dividend declared don’t have

enough cash backing and most times the company

resort to borrowing, or source for funds or use

subsequent profits to pay up dividend (Suleyman [9],

Bassam, Hikmat and Osamam [20]). Companies

and Allied Matters Act (CAMA (7) states that

dividend that is 15 months old should be remitted

back to the company and the company is expected to

use such money without any interest. And if the fund

is unclaimed up to 12 years it becomes statute barred.

Another issue is that most companies don’t publish

unclaimed dividends in their annual reports, and it is

mandatory for all public companies to do so because

this makes it easy for the companies and registrars to

conceal the status of unclaimed dividends.

Companies could separate unclaimed dividend funds

from their operation funds, but this would make the

firm to look highly liquid. These various issues have

heightened the current problem of unclaimed

dividends in Nigeria.

There is an emerging data pattern in

unclaimed dividend figures reported by SEC. Some

unclaimed dividends amount have been reported to

be with the quoted companies for some years. In

other words, both the companies themselves and the

registrars have unclaimed dividends written against

them, either by default or intentionally. This has to

do with the involvement of quoted companies with

unclaimed dividend when all dividends ought to be in

the records of the Registrars for at least one and a

half years.

7 Significance of the Study

The findings of this study will enhance our

understanding of how unclaimed dividends could be

addressed. The study specifically addressed the

defaults or the warehousing of unclaimed dividends

by both the companies which declared the dividends

and the registrars statutorily charged with the

management of dividends in Nigeria. Potential users

of this study such as investors or shareholders,

regulatory authorities, academicians, management of

companies, and the general public will find this study

useful. The study will add to existing knowledge, and

it will be beneficial to government, accountant,

professional accounting bodies, researchers, and the

Nigerian society who are concerned with the rising

unclaimed dividends in the country. This research

will be significant to government because it will

enhance government knowledge on the involvement

of the principal institutions charged with dividends

payments to investors in reducing unclaimed

dividend in Nigeria, particularly in the business

world.

8 Statutory Roles of Companies

Registrars

Every publicly quoted company appoints a registrar

that maintains shareholders` record. Some companies

appoint internal registrars and such internal registrars

may take up mandate from other public companies to

serve as registrars to them. Therefore, registrars are

companies in charge of processing declared

dividends, bonus issues, shareholders cheque or

dividend warrant, so that each investor gets

entitlement or benefit. When an investor invests in a

company, the utmost desire is to gain profit through

dividend payment or bonus issues. In order to receive

a dividend, appropriate documentation must be put in

place, but unfortunately, many shareholders have

problems getting their dividend return on their

investments, even after the proper documentation

with the registrars. The e-dividend mandate system

made it possible for the dividend to be paid directly

to an investor`s account, be it current or savings

account in any bank of their choice. Direct payment

is made possible when a person has an account in a

bank. Registrars and accredited outlets upload the

completed e-dividend mandate management system

forms to shareholders who apply for e-dividend

payment. The forms are stamped, verified by the

bank and forwarded through electronics to the

relevant registrar via a portal. The registrar then goes

ahead to register investor’s names, house address,

house numbers, and other important details to ensure

that there is no mistake. The e-dividend mandate

form would then be uploaded by the registrar which

can easily be assessed by the shareholder. The

shareholder may reject the uploaded mandate if there

was a discrepancy. Once the process is completed,

the shareholders may not need to meet the registrar

since the process is done electronically.

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9 Methods and Techniques

The population of the study is the aggregate amount

of unclaimed dividends of all the companies quoted

on the Stock market as at December, 2018. The

study examined unclaimed dividends arising from

only ordinary shares of quoted companies in the

Nigerian Stock market, from September 2012 to

December, 2018, making a period of seven years.

The choice of the period is the availability of data for

all the variables. Returns or interests from

Government bonds, States revenue bonds, and other

investment assets are not considered in the study. The

population of the study is total of the quarterly

amount of unclaimed dividends with the 19 registrars

during the period, and the total quarterly amount of

unclaimed dividends with the quoted companies, and

the aggregated unclaimed dividends amount during

the period of study. The aggregated unclaimed

dividends are from all the 264 companies quoted on

the Nigerian Stock Exchange during the period. The

method adopted in this study is the balanced panel

data analysis. The method is adopted because all the

data used are quarterly data. The three variables used

are the total or aggregate amount of unclaimed

dividends (UDTOT) during the period, the amount of

the unclaimed dividends with the quoted companies

(UDCOY), and the amount of unclaimed dividends

with the registrars (UDREG) during the period. All

the data are quarterly data.

10 Model Selection Results

The procedure for running panel data was adopted in

the study as outlined in the subsequent section: first

is to run the pooled data, followed by the Fixed

Effect and the Random Effect respectively. The

Housman Test was then carried out to identify the

appropriate model to use. See tables 1 to 5 below.

Table 1. Pooled data result. Independent variable: UDTOT

Variable coefficient ------------- prob

UDCOY 1.106018 (0.008803) 0.0000**

UDREG 0.828016 (0.011947) 0.0000**

C 1.100000 (9.24E+08) 0.0000**

R 0.941272

Adj R 0.941220

S.E 5.777778

SS 7.533333

LL -54190.95

F-stat. 18151.22

Prob(F-stat) 0.000000

MD Var 1.044444

S.D Var 2.388889

AIC 47.79008

SIC 47.79765

HIC 47.79284

DW STAT 2.260507

Notes ** significant at 5 percent.

---------------------------------------------------------------------------------------------------------------------

The pooled data result in table 1. above showed that

UDCOY and UDREG are significant at 5 percent.

The UDCOY has a t value of 125.6341 while

UDREG has a t value of 69.30752 respectively. The

t value is obtained by dividing the coefficients of a

variable by the standard error of the variable. For

example, the coefficient of UDCOY is 1.106018

divided by its standard error of 0.008969. This gives

125.6341. Thus the result revealed that all the 19

registrars are the same, or that all the companies are

the same , and since they are all significant, the

Fixed Effect model was introduced (see table 2).

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Table 2. Fixed effect model. Independent variable: UDTOT

Variable coefficient ------------- prob

C 1.10E+ 10 9.42E+08 0.0000**

UDCOY 1.106018 0.008969 0.0000**

UDREG 0.828016 0.012172 0.0000**

effects specification

Cross-section fixed (dummy variable)

R 0.941272

Adj. R 0.938984

S.E 5.888889

SS 7.533333

LL -54190.95

F-stat 411.4370

Prob(F-stat) 0.000000

MD Var 1.044444

S.D 2.388889

AIC 47.86327

SIC 48.08042

HIC 47.94250

DW STAT. 2.260507

---------------------------------------------------------------------------------------------------------------------Notes:

**significant at 5 percent.

---------------------------------------------------------------------------------------------------------------------

From table 2, FIXED EFFECT MODEL, the two

variables, UDCOY and UDREG, are again

significant. The UDCOY has a t value of 123.3107

while UDREG has a t value of 68.02579 with each

having a probability of 0.0000 respectively. The

Random Effect Model is adopted (table 3)

Table 3. Random effect model. Independent variable: UDTOT

Variable coefficient ------------- prob

C 1.10E+ 10 9.42E+08 0.0000**

UDCOY 1.106018 0.008969 0.0000**

UDREG 0.828016 0.012172 0.0000**

effects specification

Cross- section random 0.000000 0.0000

Idiosyncratic random 5.888889 1.0000

weighted statistics

R 0.941272

Adj.R 0.941220

S.E 5.777778

F-stat 18151.22

Prob(F-stat) 0.000000

MD Var 1.044444

S.Dt Var 2.388889

SS 7.533333

DW STAT 2.260507

-------------------------------------------------------------------------------------------------------------------

Notes: ** significant at 5 percent

_________________________________________________________________________

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From the result of the Random effect model in table

3 above, we find again that the two Variables are

significant. The UDCOY has a t value of 123.3107

while the UDREG has a t value of 68.02579

respectively. The probability of each was 0.0000

respectively. To decide which of the two models is

more appropriate, the HAUSMAN TEST was

adopted.

11 Hausman Test Results

We state our hypothesis,

ho: random effect model is appropriate

h1: fixed effect model is appropriate

The probability value assumed by the test

statistic of the Hausman test is 1.000O, which is

greater in value when compared to the 5 percent

significance level. This result showed that we cannot

reject the null hypothesis that the random effect

model is appropriate. Given a probability value of

1.0000, there is enough evidence to reject the fixed

effect model since it appears inappropriate. We,

therefore, resolve to use the random model for our

analysis acknowledging that the random model is

considered heteroscedasticity and autocorrelation

consistent (HAC) in standard errors, Asongu and

Nwachukwu [21]. The probability of the F-statistic,

which serves as an indication of overall model

significance is 0.000 (F-Stat = 411.437) and Prob

(F-statistic) = 0.000000, which is lower than the 5

percent level of significance. This implies a rejection

of the null hypothesis of overall model

insignificance. As such, we observe that overall, at 5

percent level of significance, our model is significant

in explaining the variability between the quoted

companies and registrars in terms of the unclaimed

dividends they control. Hence, the joint effects of all

variables included in the model, namely, unclaimed

dividends with the quoted companies and the

registrars are significant

The results, using a panel regression analysis, the

random effects model, show that the role of quoted

companies housing unclaimed dividends have

significant positive impact on the growth of

unclaimed dividends in Nigeria

We further observe that although efforts have been

made to introduce e-dividend payment by

government as a measure of reducing the rates of

growth of unclaimed dividend, which has brought

some short result, there is still need to focus on the

quoted companies on a long term to ensure that the

quoted companies do not have access to the

dividends they had earlier declared and paid to

shareholders.

From the result of the Random effect model in table

3 above, we find again that the two Variables are

significant. The UDCOY has a t value of 123.3107

while the UDREG has a t value of 68.02579

respectively. The rule is still violated. Then the next

step is to choose which of the two models is

appropriate for our analysis. This was done by

running the HAUSMAN TEST to decide which of

the models was appropriate.

12 Discussion

Recall, that our stated hypothesis is that there is no

significant impact of the role of quoted companies on

unclaimed dividends in Nigeria. The study revealed

that there is no difference between the significant

impacts of both the quoted companies and the

registrars, in terms of warehousing unclaimed

dividends in Nigeria. Yet the registrars are statutorily

responsible for the management of the process of

payment of declared dividends and not that of the

quoted companies that declared the dividends.

Furthermore, most of the registrars are established by

the large quoted companies as their subsidiaries

(known as in-house registrars) with no separate

boards to manage them. This has implications for the

rising trend of unclaimed dividends in Nigeria

because there is doubt about the transparency in the

management of unclaimed dividends between the in

house registrars and the quoted companies that

established them in Nigeria. The supervisory

authorities like the Securities and Exchange

Commission (SEC), Nigerian Stock Exchange

(NSE), should introduce a tougher measure to bar

quoted companies from having access to free funds

from unclaimed dividends. The present practice

where quoted companies get back the dividends they

have paid would continue to be a conduit pipe for

quoted companies to deny investors their hard earned

investment returns and reinvest such funds. The

unclaimed dividends would become working capital

to the quoted companies. It is clear from the study

that despite the introduction of e-dividend payment in

2015, unclaimed dividend figures are still on the rise.

It indicates that quoted companies could be

contributory a contributory factor to the rising trend

of unclaimed dividends in Nigeria. The study would

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fill the gap which other previous studies did not

address.

13 Conclusion

There is need for the supervisory authorities to

review and amend the Companies and Allied Matters

Act to extend the number of years beyond twelve

years and that investors could claim their dividends

any time. The idea of twelve years as a period in

which unclaimed dividends would be statute barred is

the reason for the quoted companies to have access

to the unclaimed dividend funds and use the funds

as working capital to the detriment of the investors.

In addition, the unclaimed dividends could be used

for public good, by taking the funds from the quoted

companies and investing it on a defined projects in

the society. This will go a long way to resolve the

issue of unclaimed dividends in Nigeria. A situation

where large companies set up their own registrars

(in-house registrars) and these in house registrars

now dominate the market calls for a review of

CAMA.

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13.

Contribution of Individual Authors to the

Creation of a Scientific Article (Ghostwriting

Policy)

Emoarehi Eriki wrote and analysed the article.

Francis Iyoha supervised the article

Dorcas Adetula supervised the article.

Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

The Authors appreciate Professor Peter Eriki for

providing the financial sponsorship of this article.

Creative Commons Attribution License 4.0

(Attribution 4.0 International, CC BY 4.0)

This article is published under the terms of the

Creative Commons Attribution License 4.0

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Conflict of Interest

The authors have no conflicts of interest to declare

that are relevant to the content of this article.