Effects of Dividend Policy on Corporate Performance of Deposit Money Banks in Nigeria
- August 9, 2019
- Posted by: RSIS
- Categories: Accounting, Management
International Journal of Research and Scientific Innovation (IJRSI) | Volume VI, Issue VII, July 2019 | ISSN 2321–2705
Effects of Dividend Policy on Corporate Performance of Deposit Money Banks in Nigeria
USMAN Owolabi. A., OLORUNNISOLA Abiola. O*
Department of Management and Accounting, Ladoke Akintola University of Technology, Ogbomosho, Oyo State, Nigeria
*Corresponding author
Abstract: Dividend policy refers to firm decision framework on payout pattern from corporate earnings. The quantum of such payment has largely conveyed acceptance/rejection information about such share in the Nigerian capital market. Firm’s dividend policy has been identified as a major determinant of investors’ attraction to a corporate share in the capital market. The main objective of this study is to evaluate the effects of dividend policy on corporate performance in selected Nigeria Deposit Money Banks (NDMBs). Purposive random sampling method was used to select seven out of the sixteen quoted NDMBs based on the size of their capital. Secondary data used were obtained from annual reports of sampled NDMBs and Nigerian Stock Exchange over a period of ten years (2009-2018). The variables used in this study included Retained Earnings (RE), Earning Per Share (EPS), Dividend Per Share (DPS), Return On Equity (ROE), Dividend Payout (DPO), and Market Value (MV). Collected data were analyzed using both descriptive and inferential statistics such as the mean, Standard deviation and Panel regression. Panel regression was used to assess the effects of dividend policy on corporate performance of NDMBs. The results showed that RE, EPS and DPS had positive significant effect on CP with coefficient value of 0.459; (p < 0.000), 0.003; (p < 0.003), 0.788; (p < 0.001) respectively with Adj. R2 = 0.311. The research concluded that dividend policy has significant effect on corporate performance of NDMBs. This study recommended that, managers should improve their working capital and measure them with fair value. Also, banks should increase the level of asset capital to improve profitability. They should be consistent with dividend payout ratio of the shareholder of NDMBs.
Keywords: Dividend policy, profitability, corporate performance, DMB
