Investigating Dividends Policy and Market Value of Shares in Selected Quoted Deposit Money Banks in Nigeria

Dividend policy is a crucial decision area, one of the most important decisions in financial policy, not just from the company’s point of view, but also from the shareholders’ and other stakeholders’ point of view. This study analysed the relationship between the dividend policy and the market value of Nigeria’s quoted deposit money bank shares in relation to the dividend payment restriction as set out in Section 17 of the Banks and Other Financial Institutions Act (2007). The aims of the analysis were: to determine the relationship between the pay-out ratio of dividends; earnings per share; profit after tax; and the market value of shares. The research was based on the theory of dividend significance and the theory of dividend irrelevance. Using secondary data, the panel data analysis design approach was adopted. The secondary data was collected from the annual reports of the ten deposit money banks quoted. Multiple regressions, i.e. The relationship between the variables for the period 2001-2017 was evaluated using the Panel Least Square process. The results showed that the dividend policy has a positive significant effect on the market value of deposit money bank shares in Nigeria, indicating that all variables have a positive impact on the market value of deposit money bank shares. Over the period defined, the study’s dividend policy contributed positively and strongly to the market value of deposit money bank shares listed on the Nigerian Stock Exchange. The study concluded that dividend policy is an important corporate finance and financial policy decision mechanism that not only affects the market value of deposit money bank shares in Nigeria from the point of view of the shareholders of the banks, but also from that of stakeholders such as workers and regulatory bodies. Consequently, the study recommended that the management of quoted deposit money banks should take all measures possible to ensure that they remain profitable. They should pay heed to their Dividend pay-out to maintain the prosperity of their shareholders and retain future buyers.

Author (s) Details

Dr. Akinwunmi, Adeboye
Department of Banking and Finance, Achievers University, Owo, Nigeria.

Akinola, Akinwumi Olusegun
Department of Accounting, Achievers University, Owo, Nigeria.

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