EFFECT OF DIVIDEND POLICY ON FIRM VALUE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

The aim of this paper is to examine the effect of dividend policy on firm value of Listed Deposits Money Banks in Nigeria. The study employed ex post facto research design. Ex post facto research design is used to determine the relationship among variables. The twenty five year (1997 to 2021) time series dataset was obtained from the CBN statistical bulletin. The secondary data used were from all the 15 listed deposits money banks in Nigeria. The study used regression techniques for data analysis. The study found that dividend payout ratio has a negative effect on firm value by lowering the equity value of banks' stocks. In addition, the study discovered strong proof that retained earnings had a detrimental major impact on the firms’ worth as indicated by the equity over stock price. The study therefore, recommends that to raise the business value, decision-makers at Nigerian Deposit Money Banks could modify their dividend policy in a way that discourages higher dividend payout ratios. Lower payout ratio will impact positively on the firm value of deposit money banks in Nigeria, therefore banks directors should give good attention on retained profits and dividend payout ratio in their dividend policy decision.