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


Adeboye Akinwunmi , Akinola Akinwumi Olusegun ,

Download Full PDF Pages: 01-11 | Views: 956 | Downloads: 310 | DOI: 10.5281/zenodo.3510062

Volume 8 - September 2019 (09)


This study examined the relationship between dividend policy and market value of shares of quoted deposit money banks in Nigeria in relation to the restrictions 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 payout ratio, earnings per share, profit after tax and market value of shares. The Study was predicated on dividend relevance theory and irrelevance theory of dividend. 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 regression, i.e. Panel Least Square method, was used to test the relationship between the variables for the period 2001-2017. The result showed that dividend policy has a significant positive impact on market value of shares of deposit money banks in Nigeria, implying that all variables relating to dividend policy in the study under the period specified contributed positively and strongly to the market value of shares of deposit money banks listed in the Nigerian Stock Exchange. The study concluded that dividend policy is a pertinent corporate finance function and financial policy decision which affects the market value of shares of deposit money banks in Nigeria. The study, therefore, recommended that management of quoted deposit money banks should take all necessary steps to ensure that they remain profitable. They should pay attention to their dividend payout in order to sustain their shareholders' wealth and attract prospective investors.


Dividends Policy, Market Value



i.        Abdullah, A.M (2014), Dividend Policy and Its Impact on Stock Price – A Study on  Commercial Banks Listed in Dhaka Stock Exchange. Global Disclosure of Economics  and Business, 3, (1), 9-17.

ii.      Adesola, W.A and Ekwong A.E, (2009). An Empirical Analysis of Dividend Policy of quoted  Companies in Nigeria. Global Journal of Social Sciences 8(1), 85-101. 

iii.    Akbar, M. & Baig, H.H. (2010). Reaction of stock prices to dividend announcements and market efficiency in Pakistan. The Lahore Journal of Economics, 15(1), 103-125.

iv.     Al-Malkawi, (2008). Factors Influencing Corporate Dividend Decision: Evidence from Jordanian Panel Data. International Journal of Business, 13 (2).

v.       Arnott, R.D & Asness, C.S.,(2003). Surprise! Higher Dividends = Higher Earnings Growth.Financial Analysts Journal, (59), 1.

vi.     Baah, B.K., Tawiah, R. & Eric, O.F. (2014). Industry sector determinants of dividend policy andits effect on share prices in Ghana. International Journal of Economics, Business and Finance, 2 (5), 1-19.

vii.   Baker, H., Powell, E. and Theodore, V. (2007). Revisiting the dividend Puzzle: Do All the Pieces Now Fit? Review of Financial Economics II (4), 241-261.

viii. DeAngelo, H., and DeAngelo, L. (2000). Reversal of fortune, Dividend Signaling and the  Disappearance of Sustained Earnings Growth. Journal of Financial Economics, 40, 341-371.

ix.     DeAngelo, H., DeAngelo, L., & Stulz, R. (2006). Dividend Policy and the Earned/Contributed Capital Mix: A Test of the Life-Cycle Theory. Journal of Financial Economics, 81, 227-254.

x.       Duke, S.B., Ikenna, N.D., & Nkamare, S. E. (2015). Impact of Dividend Policy on Share Price Valuation in Nigerian Banks. Archive of Business Research, 3(1)156-170.

xi.     Gordon, M.J. (1962). The Investment, Financing, and Valuation of the Corporation. Homewood,  Illinois: Irwin Publishers.

xii.   Hunjra, A. I., Ijaz, M. S, Chani, M. I., Hassan, S. and Mustafa, U. (2014). Impact of Dividend Policy, Earning per Share, Return on Equity, Profit after Tax on Stock Prices. International Journal of Economics and Empirical Research, 2(3), 109-115.

xiii. Jatmiko, D.P. (2016) The Influence of Agency Cost, Market Risk, and Investment Opportunities on Dividend Policy. International Journal of Management and Commerce Innovations, 3 (2), 68-75.

xiv. Joshi, R. (2012). Effects of Dividends on Stock Prices in Nepal. NRB Economic Review, 24(2), 61-75.

xv.   Karnawi, K, (2017). Analysis of the effect of return on equity and debt to equity ratio on stock price on cement industry listed in Indonesia stock exchange in the year of 2011-   2015. Journal of Business and Management, 19(5), 66-76.

xvi. Lease, R.C., John, K., Kalay, A., Loewenstein, U. and Sarig, O.D. (2000), Dividend Policy:Its Impact on Firm Value, Harvard Business School Press, Boston, MA.

xvii.           Lintner, J. (1956). Distribution of Incomes of Corporations Among Dividends, Retained Earnings, and Taxes.  American Economic Review, 46(2), 97-113.

xviii.         Miller, M.H., and Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. The  Journal of Business, 34(4), 411-433.

xix. Mirza, H. and Afza, T., (2014). Impact of Corporate Cash Flow on Dividend Pay-outs: Evidence from South Asia. Middle-east Journal of Scientific Research, 19 (4), 472-   478.

xx.   Nnamdi, S.I., (2009). Corporate Earnings and Dividend Pay-out in Nigeria. A Seminar Paper Presented to the Department of Banking and Finance in Fulfilment of the Award of PhD in Finance, Abia State University Uturu.

xxi. Nwamaka, O.C., and Ezeabasili, V., (2017). Effect of Dividend Policies on Firm Value: Evidence from quoted firms in Nigeria. International Journal of Management Excellence, 8(2), 956-967.

xxii.           Obamuyi. T. M. (2013). Factors Influencing Investment Decisions in Capital Market: A study of Individual investors in Nigeria. Organizations And Markets In Emerging Economies, 4(1),7.

xxiii.         Pandey, I.M., (2005). Financial Management. New Delhi: Vilkas Publishing House PVT Ltd.

xxiv.          Pandey I.M, (2008). Management Accounting. Third revised edition Dehil, Jitendra printing press.

xxv.            Pani, U. (2008). Dividend Policy and Stock Price Behaviour in Indian Corporate Sector:A panel data approach. Indian institute of technology.

xxvi.          Paramasivan, C. and Subramanian, T., (2012). Financial Management. Fifth Edition, New Delhi, New Age International Limited.

xxvii.        Salman, A.; Lawal, A. & Anjorin, S., (2015). The Impact of Dividend Policy on the Share Priceof Selected Quoted Firms in Nigeria. Journal of Finance and Accounting, 771.

xxviii.      Sharif, I., Ali, A., and Farzand, A. J., (2015). Impact of Dividend Policy Determinants of  Listed Companies on Indian Capital Market. Journal of Finance and Accounting, 5 (2), 40-43.

xxix.          Shehzad, K. A. & Ismail, A. (2014). Value relevance of Accounting Information and its Impact on Stock Prices: Case Study of Listed Banks at Karachi Stock Exchange. Journal of Economic Information, 3(1), 40-48.

xxx.            Solomon, A.Z., Memba, F.S., & Muturi, W.,(2016). Eanrings Per Share and Equity Share Investment in Companies Listed on Nigerian Stock Exchange. European Journal of Business, Economics and Accountancy, 4(1), 68-78.

xxxi.          Uddin M. H., and Chowdhury G. M. (2005). Effect of Dividend Announcement on Shareholders’ Value: Evidence from Dhaka Stock Exchange, Journal of Business Research, 7 (1), 61-72.

xxxii.        Zakaria, Z., Muhammad, J. & Zulkifli, A.H. (2012). The Impact of Dividend Policy on the Share Price Volatility: Malaysian Construction and Material Companies.  International Journal of Economics and Management Sciences, 2 (5), 1-8.

xxxiii.      Zayol, P.I, Mya A.I & Muolozie, M., (2017). Determinant of Dividend Policy of Petroleum  Firms in Nigeria. Journal of Economics and Finance, 8(3), 54-62.

xxxiv.      Zhou, P. & Ruland, W., (2006) Dividend Pay-out and Future Earnings Growth. Financial Analysts Journal, 62(3), 58-69.


Cite this Article: