Dividend Decisions and Market Value of Firms in Nigeria

Abstract

The study investigated the factors that could influence dividend decision and value of the firm. Anchored on signaling theory, the study adopted both cross-sectional and longitudinal research designs. The population of the study consisted of all listed manufacturing firms in Nigeria. The final sample size after filtering was 41 manufacturing firms giving a total of 451 year end observations. The study adopted three separate econometric models for capturing and testing for the relationship between dividend decisions and firm value. Findings of the study revealed that profitability has a significant positive effect on dividend payout while availability of investment opportunities was found to be positive but not significant. Leverage was also found to have a negative but not significant effect on dividend payout. Further, dividend payout, profitability, leverage, and investment opportunities were found to have significant positive effect on firm value. The study concludes that dividend decisions influence value of listed manufacturing firms in Nigeria and recommends amongst others that corporate managers should implement dividend policy that will enhance shareholders wealth maximization and take care of the investment opportunities of the firm.