Effect of Dividend Payments on Share Prices of Quoted Deposit Money Banks in Nigeria

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• October 23, 2023
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Chime, Uchenna Augustine¹, Prof. Onyekwelu, Uche Lucy³ & Okoh, Isaac Chibuzo^3
123Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria

Abstract This study examined the effects of dividend payments on share prices of quoted deposit money banks in Nigeria. The specific objectives of the study are to: determine the effect of dividend payout ratio on share prices of quoted deposit money banks in Nigeria, examine the effect of dividend per share on share prices of quoted deposit money banks in Nigeria and ascertain the effect of dividend yield on share prices of quoted deposit money banks in Nigeria. The study was an expo facto research design which span for a period of 10 years from 2013 to 2022. The study adopted a stratified sampling technique in determining the sample size, hence 15 Deposit Money Banks operating on the Nigerian Exchange Group with total observation of 150 were sampled for analysis. Regression analysis applied as panel estimation were used in testing the hypotheses, since the dataset combines cross-sections and time series which increases the number of degree of freedom and strengthens the power of the tests. Findings arising from the panel least squares indicates dividend payout ratio exerts a significant and positive effect on share prices of the sampled Deposit Money Banks in Nigeria with p-value of 0.0018 < 0.05 and the t-statistics of 3.172829 > 2. The result also revealed that dividend per share has a significant and positive effect on share prices of the sampled Deposit Money Banks in Nigeria with probability value of 0.0012< 0.05 and a t-Statistic of 3.309352>2. More so, Dividend yield has a significant and positive effect on share prices of the sampled Deposit Money Banks with probability value of 0.0306 < 0.05 and a t-Statistic of 2.183960>2. These findings suggest that dividend payments play a crucial role in influencing investor perceptions and demand for the bank’s shares. Conclusively, the study portrays that consistent dividend payments can assist deposit money banks in formulating effective dividend policies, attracting investors, and maximizing shareholder value. It was recommended that Deposit money banks should carefully determine an appropriate dividend payout ratio that balances the interests of shareholders and the need for reinvestment in the business. Keywords Dividend Payments; Share Prices; Dividend Yield, Shareholder Value; Deposit Money Banks Citation Chime, U. A., Onyekwelu, U. L. & Okoh, I. C. (2023).  Effect of Dividend Payments on Share Prices of Quoted Deposit Money Banks in Nigeria. International Journal of Advanced Finance and Accounting, 4(4), 42-56, https://doi.org/10.5281/zenodo.10033268