Dividend Policy and Share Price Volatility of Deposit Money Banks in Nigeria
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2022-12
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Lead City University
Abstract
Dividend policy and Share price are critical decision area, these are one of the most important financial policies decision, not only from the viewpoint of financial institutions, but also from that of the shareholders and other stakeholders. This Thesis examined the impact of dividends policy and share price volatility of quoted deposit money banks in Nigeria in relation with the restriction of dividend payments as spelt out in Section 17 of the Banks and Other Financial Institutions Act (2007). The objectives of the study were: to ascertain the relationship between dividend pay-out ratio; earnings per share; profit after tax; and market value of shares. The panel data research design methodology was adopted using secondary data. The secondary data were obtained from annual reports of the ten quoted deposit money banks. The multiple regressions and Least Square method was used to test the relationship between the variables for the period 2017-2021. The results showed that dividend policy has a positive significant impact on share price of deposit money banks in Nigeria (coefficient of Dyield = -3.0365, p-value = 0.035). The study concluded that dividend policy is a pertinent corporate finance function and financial policy decision which affects the share price of deposit money banks in Nigeria not only from the view point of the banks’ shareholders but also from that of stakeholders such as employees and regulatory bodies. The study therefore recommended that, managements of quoted deposit money banks should take all necessary steps to ensure that they remain profitable. They should pay attention to their dividend pay-out in order to sustain their shareholders' wealth and attract prospective investors.
Keywords: Dividends policy; Share price; market value; deposit money banks.
Words: 278
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Kate Turabian