Abstract
This study empirically investigated the impact of Dividend Policy on Share Price of Firms Listed on ICT Sector of Nigerian Stock Exchange. In order to determine the relationship between dividend policy and share price of firms, dividend policy key proxy variables were used in the study, namely; Dividend Payout (DPO), Dividend Per Share (DPS) and Dividend Yield (DY) while Share Price (SP) on the other hand was measured using Market Price of Shares (MPS). Three hypotheses were formulated to guide the investigation and the statistical test of parameter estimates was conducted using OLS Model operated with STATA 15. Ex Post Facto Design was adopted and data for the study were obtained from the Nigerian Stock Exchange Factbook and Annual Reports and Accounts of listed ICT firms in Nigeria spanning from 2016-2020. The findings generally indicate that Dividend Payout, Dividend Per Share & Dividend Yield have exerted significant and positive impact on Firms Share Price at 1% significant level. Based on this, the study concludes that dividend policy is capable of influencing firms’ share prices in Nigeria. By this implication, the study supports the relevant theories of dividend policy reviewed in this study as irrelevant theories of dividends do not hold in the case of Nigeria. The study recommends among others that firms’ willing to maximize share price should consistently increase their dividend payment as this sends signal to the investors about the firm’s market performance and financial health.
Highlights
Dividend policy has remained one of the controversial issues in corporate finance. Ordu, Enekwe and Anyanwaokoro (2014) noted that some financial analysts attribute the failure of some quoted firms to non-payment of dividends which according to them made investors lose interest in trading on stocks
This study considered it imperative to examine the relationship between dividend policy and share price of firms
H03: Dividend Per Share has no significant impact on Share Price of Listed Information and Communication Technology (ICT) Firms in Nigeria
Summary
Dividend policy has remained one of the controversial issues in corporate finance. Ordu, Enekwe and Anyanwaokoro (2014) noted that some financial analysts attribute the failure of some quoted firms to non-payment of dividends which according to them made investors lose interest in trading on stocks. From the a priori expectations, it was observed that corporate organisations are faced with the problem of whether to pay a large, small or zero percentage of their earnings as dividend vis-à-vis financing future investment projects. This problem is borne out of the desire to satisfy the various needs of shareholders. A large number of firms in the developing economies are still apathetic about their dividend decisions as they are unaware of the connection between the dividend decisions and their performance Based on this observation, this study considered it imperative to examine the relationship between dividend policy and share price of firms
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