Dividend Policy Decisions and Share Price Volatility of Deposit Money Banks in Nigeria
1ADESANYA, Adewale Abdul, 2ADEJUWON, Joshua Adewale
1PhD Accounting Student, Lead City University, Ibadan, Nigeria.
2Associate Professor of Management & Accounting, Lead City University, Ibadan, Nigeria.
https://doi.org/10.47191/jefms/v7-i7-92
ABSTRACT:
Dividend policy and Share price movements are critical decision areas, which 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 dividend 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 and earnings per share; profit after tax; and market value of shares. The panel data research design methodology was adopted using secondary data. It was 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 2018-2022. The results showed that dividend policy decision 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 the managements of quoted deposit money banks should take necessary steps to ensure that the banks 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.
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