The effect of dividend policies on wealth maximization – a study of some selected plcs

C.N Ozuomba,A.S Anichebe,P.V.C Okoye,Collins Gyakari Ntim

doi:10.1080/23311975.2016.1226457

Abstract

AbstractThis research article examines how share value thus shareholders wealth is affected by dividend policies. This study seeks to analyze the effect of firm’s dividend policies on shareholders’ value of public companies in Nigeria, to empirically examine the linkage of dividend payout with information asymmetry, and to analyze the effect of various dividend policies on shareholders wealth. This study is based on survey design covers a one-year period with a sample of 10 quoted companies in the Nigeria stock exchange. In so doing, the methodology adopted is the Anova. This study shows the relevance of dividend and further proves that dividend policies of public limited companies influence the wealth of shareholders in Nigeria.

Highlights

Dividends can be defined as the distribution of earnings in real assets among the shareholders of a firm in proportion to their ownership (Kapoor, 2009)
In a managed dividend policy, managers tend to smoothen dividend by fixing dividend payment at a certain level of earnings and investment while in the residual, dividend are paid only after possible investment portfolios are made
Ozuomba is currently pursuing a Doctor of Philosophy (PhD) degree at Anambra State University, Igbariam Campus, Nigeria

Summary

Introduction

Dividends can be defined as the distribution of earnings (past or present) in real assets among the shareholders of a firm in proportion to their ownership (Kapoor, 2009). In a managed dividend policy, managers tend to smoothen dividend by fixing dividend payment at a certain level of earnings and investment while in the residual, dividend are paid only after possible investment portfolios are made. In this case, dividend will tend to be highly variable and often zero. Ozuomba holds a Master of Science degree from Nnamdi Azikiwe University Awka, Anambra State, Nigeria. Ozuomba has conducted research in areas like dividend policies on shareholders wealth, internal control on performance in the public sector, Forensic accounting relevance in the face of increasing fraudulent activities in Nigeria. This research work the effect of dividend policies on wealth maximization—A study of some selected public limited companies, will enable investors identify that dividend policy that will best maximize their wealth

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Conclusion