The Impact Of Dividend Policy On The Share Price Of Quoted Companies In Nigerian Stock Exchange

International Journal of Economics and Management Studies
© 2019 by SSRG - IJEMS Journal
Volume 6 Issue 8
Year of Publication : 2019
Authors : N. V.Ohiaeri, F. I. Akinbowale,B. Ogumeru
How to Cite?

N. V.Ohiaeri, F. I. Akinbowale,B. Ogumeru, "The Impact Of Dividend Policy On The Share Price Of Quoted Companies In Nigerian Stock Exchange," SSRG International Journal of Economics and Management Studies, vol. 6,  no. 8, pp. 145-156, 2019. Crossref,


The study examines the effect of dividend policy on the share prices of Nigerian quoted companies in Nigeria between 2009 and 2017 across ten companies. Secondary method of data collection was used to generate data for this study and the source of the data was from annual report of all the sampled companies. Multiple panel least square estimation, through the of Housman’s test, was used to analyze the data in this study. In the econometric model, market share price (dependent variable) was regressed on dividend yield, earning per share, dividend per share, profit after tax and retention rate. The study revealed that there exists joint significant relationship between dividend yields, earning per share, dividend per share, profit after tax, retention rate and market share prices. The study therefore recommends that; Nigerian firms should try to maintain a regular and consistent dividend policy so that prospective investor could know beforehand whether or not a firm’s dividend policy tallies with their own expectation (client effect). The government should assist in improving the quality and availability of secondary data bank relating making informed decision on share prices and dividend in Nigeria.


Dividend policy, Share price, Dividend yield, Corporate earning


[1] Adefila, J. J., Oladipo J. A. &Adeoti, J. O. (2000). The Effect of dividend policy on the market price of shares in Nigeria: A case study of fifteen quoted companies, International Journal of Accounting. University of Ado-Ekiti, 2(1).
[2] Adesola, W. A. &. Okwong, A. E (2011). An empirical study of dividend policy of quoted companies in Nigeria. Global Journal of Social Sciences. 8(1),5-101.
[3] Adelegan, O. J, Adeyemo K. A, Adejuwon J. A &Taiwo, A. O. (2015). Determinants of dividend policy of corporate firms in Nigeria, Institutes of Chartered Accountants of Nigeria 1st academic conference of accounting and finance, 720-741.
[4] Akinkoye, E. &Akinadewo, I. (2018). Retained Earnings and Firms‟ Market Value: Nigeria Experience. The Business and Management Review, 9(3),1-15.
[5] Bhattacharya, S. (1979).“Imperfect Information, Dividend Policy and the Bird- In-The-Hand Fallacy”. The Bell Journal of Economics. 2(3),1-10.
[6] Cyert, R. M. & March, J. G. (1963). The behavioral theory of the firm, New Jersey: Prientice-Hall Inc.
[7] Ehikioya, B. I. (2015). An empirical investigation of the impact of dividend policy on the performance of firms in developing economics. International Journal of Finance and Accounting, 4(5), 245-252.
SSRG International Journal of Economics and Management Studies (SSRG-IJEMS) – Volume 6 Issue 8– Aug 2019
ISSN: 2393 – 9125 Page 156
[8] Eniola, O. J. &Akinselure, O. (2016). Impact of dividend policy and earnings on selected quoted companies in Nigeria. International Journal of Innovative Research & Development, 5(6),450-460.
[9] Farrukh, K., Irshad, S., Khakwani, M. S., Ishaque, S. & Ansari, N. (2017). Impact of dividend policy on shareholder‟s wealth and firm performance in Pakistan, Cogent Business &Management,
[10] Friend, I. & Puckett, M. (1964).Dividends and stock prices. American Economic Review, 54(5),656-682.
[11] Farsio, F., Geary, A., & Moser, J. (2004).The relationship between dividends and earnings.Journal for Economic Educators, 4(4), 1–5.
[12] Gittman, C. Z. (2004).” Principles of Managerial Finance”.110-201.
[13] Graham, D. & Dodd, G. (1951) Security analysis, New York, McGraw Hills.
[14] Harkavy, O. (1953). The relation between retained earnings and common stock prices for large listed corporations.Journal of Finance, 8(3),283-297.
[15] Horkan, L. (2014). Are Retained earnings part of a stockholder's equity?// Retrieved 13/08/2014.
[16] Jensen, M. C., &Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics. 3(1),305-360.
[17] Kajola, S. O., Adewumi, A. A., &Oworu, O. O (2015). Invest in large firms in the non-financial sector and specifically firms which put their funds in risky investments. International Journal of Economics, Commerce and Management, 3(4),1-13.
[18] Khan, K. I. (2012). "Effect of Dividends on Stock Prices– A Case of Chemical and Pharmaceutical Industry of Pakistan", Management, 2(5), 141-148. Available at doi: 10.5923/
[19] Koutsoyiannis, A. (2003). Non-Price Decisions: the firm in a modern context. London, Macmillan Press Ltd, 23-671.
[20] Lumby, S. (2011). Corporate Finance Theory and Practice (8th ed.), Hampshire: Cengage Learning EMEA.
[21] Modigliani, F. & Miller, H. M. (1961).Dividend policy, growth and valuation of shares, Journal of Business. 34(4),411-433.
[22] Mukora, M. Y. (2014). The effect of dividend announcement on stock returns of firms listed at the Nairobi securities exchange, A Masters dissertation submitted to University of Nairobi, Kenya.
[23] Nazir, M. & Nawaz, M. (2011). How dividend policy affects volatility of stock price of financial sector firms of Pakistan. American Journal of Scientific Research, 2(1), 1-22.
[24] Nishat, M. (1995). Share Prices, Dividend & share retained earnings behaviour in Pakistan stock market. The Indian Economic Journal, 40(4), 56-95.
[25] Ogolo, D. A. (2012). The effect of dividend policy on share prices of multinational and local companies listed at the Nairobi securities exchange. Unpublished MBA project, University of Nairobi, Nairobi, Kenya; 2012.
[26] Olamide, E. G, &Sajuyigbe A. S. (2011). Financial management theory and practice.OsogboWorldwad Publishers Ltd; 2011.
[27] Oliver, I. I. &Ugah, H. (2015). Interactions between earnings and dividend payout rate in the oil and gas sector: Evidence from Nigeria. International Journal of Finance and Accounting, 4(5), 253-261.
[28] Oyedele, O. &Adeleke, K. (2018). Dividend Policy and Share Price: Empirical Investigation of Zenith Bank Plc., Nigeria. Asian Research Journal of Arts & Social Sciences, 6(1):1-9.
[29] Pandy, I. M. (2011).Financial Management, Vikas Publishing House PVT Ltd., India. 776.
[30] Power, D. & MacDonald, R. (1995). Stock prices, dividends and retention: Long-run relationships and short-run dynamics. Journal of Empirical Finance, 2(2), 135-151.
[31] Solomon, E., (1963) “The theory of Financial Management”, Columbia University Press.
[32] Rachid, M. &Wiame, B. (2016). The relationship between dividend payments and firm performance: A study of listed companies in Morocco. European Scientific Journal, 12(4), 469-482.
[33] Randy, I. M. (1979). Financial Management New Delhi, Vikas Publishing House, 302-324.
[34] Shisia, A., Sang, W., Sirma, K. &Maundu, C. (2014). Assessment of dividend policy on financial performance of telecommunication companies quoted at the Nairobi Securities Exchange. International Journal of Economics, Commerce & Management, 2(10), 1-21.
[35] Topal, Y. (2014). The influence of dividend payments on company performance: The case of Istanbul stock exchange (BIST), European Journal of Business and Management. 6(3), 189-197.
[36] Umar, H. U. &Saidu, A. S. (2016). Dividend policy and financial performance of oil and gas companies in Nigeria: A Non-linear Relationship Assessment. Nigerian Journal of Management Technology & Development, 7(1),1-10
[37] Uwuigbe, U., Jafaru, J., &Ajayi, A. (2012). Dividend policy and firm performance: A study of listed firms in Nigeria. Accounting and Management Information Systems. 11(3),442-454.
[38] Van Horne, J.C. (1971). Fundamentals of Financial Management New Jersey Prentice Hall
[39] Walter, J. E. (1963). Dividend Policy; It Influence on the Value of the Enterprise”. Journal of Finance. 1(2), 280-291.
[40] Williams, J. B. (1938). The Theory of Investment Value, Cambridge, Harvard University Press.
[41] Wright, T. C. (2014). Difference of profit and retained profit.
[42] Zayol, P. I, Mya, A. T. &Muolozie, M. (2017).Determinants of dividend policy of petroleum firms in Nigeria, Journal of Economics and Finance. 8(3), 54-62. DOI: 10.9790/5933-0803045462.
[43] Zhou, P. &Ruland, W. (2006).Dividend payout and future earnings growth.Financial Analysts Journal. 62(3),58 – 69.