Abstract
This study investigates the relationship between financial performance and dividend policy for a sample of fifteen Deposit Money Banks quoted on the Nigeria Stock Exchange 2009 to 2014. Panel data regression analysis was used as the method of analysis, and the model was estimated using the Pooled Least Squares estimation technique. The study revealed that there is a positive and significant relationship between dividend payout ratio and financial performance. On the contrary, there is a negative and insignificant relationship between dividend yield and financial performance. The study recommends that since there is a positive and significant relationship between dividend payout ratio and financial performance, firms should strive to maintain healthy and a stable dividend policies. This could be attained by investing in projects that give positive Net Present Values, thereby generating huge earnings, which can be partly used to pay dividends to their equity shareholders. It is also recommended that since dividend yield is not affected by financial performance, investigations should be made to ascertain other factors that affect dividend yield. Key words: Dividend policy, financial performance, earnings per share, panel data regression analysis.
Highlights
Dividend policy is one of the most controversial issues in modern corporate finance. Black (1976) argues that “the harder we look at the dividend picture, the more it seems like a puzzle, with pieces that just don‟t fit together”
This study investigates the relationship between financial performance and dividend policy for a sample of fifteen Deposit Money Banks quoted on the Nigeria Stock Exchange 2009 to 2014
The general objective of this study is to examine the relationship between dividend policy and financial performance of Deposit Money Banks
Summary
Dividend policy is one of the most controversial issues in modern corporate finance. Black (1976) argues that “the harder we look at the dividend picture, the more it seems like a puzzle, with pieces that just don‟t fit together”. Black (1976) argues that “the harder we look at the dividend picture, the more it seems like a puzzle, with pieces that just don‟t fit together”. Dividend policy is one of the most controversial issues in modern corporate finance. This mystery led to the emergence of a handful of competing theoretical and empirical research to explain why companies pay or do not pay dividends. After decades of non-stop research, dividend policy is still listed as one of the top ten crucial unresolved issues in the world of finance in which no consensus has been reached (Brealey and Myers, 2003). The other three are financing, investment, and working capital management decisions
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