DIVIDEND POLICY AND ITS IMPACT ON MARKET VALUE OF DEPOSIT MONEY BANKS’ IN NIGERIA

Abstract

The study investigates dividend policy and its impact on market value of deposit money banks’ in Nigeria; for the period 1996-2019.Secondary data arecollected from the Central Bank of Nigeria Staistical Bulletin, 2019.The study uses equity/stock price of quoted deposit money banks’in Nigeria as proxy for market value ofdeposit money banks’in Nigeria and employs as the dependent variable; whereas, dividend payout ratios, retained earning ratios, dividend yields and earnings per shares are use as independent variables to measure dividend policy. Hypotheses are formulated and tested using time series econometric techniques.The study shows a positive significant impact of dividend payout ratio on the market value of deposit money banks’ in Nigeria. Retained earningratios have a positive significant impact on the market value of deposit money banks’ in Nigeria. Dividend yields have a positive significant impact on the market value of deposit money banks’ in Nigeria. There is a posive significant impact of earnings per shares on the market value of deposit money banks in Nigeria. The coefficient of determination indicates that about 62% of the variations in market value ofdeposit money banks’in Nigeria can be explain by changes in dividend policy variables (DPR, RER, DY, EPS) in Nigeria.The study concludes that dividend policy has a significant impact on the market value of  deposit money banks’ in Nigeria.The study  recommends that regulatory authorities should step up regulatory oversight functions to ensure transparency, business ethics and good corporate governance in the banking sub sector. This will help reduce the fears of investors and the practice of declaration of huge paper profits, insider trading, manipulation of stock prices.