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Author(s): Bukunola Odufisan, Oluwagbenga David Adekunle, Olalekan Akinrinola (Ph.D.).

Volume/Issue: Volume 8, Issue 2 (2025)

Page No: 147-163

Journal: African Journal of Accounting and Financial Research (AJAFR)

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Abstract:

This study examines the impact of dividend policy on firm value in selected manufacturing firms in Nigeria. Using secondary data obtained from the annual reports of Nestle Nigeria Plc, Cadbury Nigeria Plc, and Guinness Nigeria Plc from 2019 to 2023, the study employes panel data regression analysis to analyse the relationship between dividend policy proxies, such as dividend payout ratio, retention ratio, and dividend per share, and firm value measured by market price per share. The Hausman test was conducted to determine the appropriate regression model. Findings revealed that dividend payout ratio has an insignificant effect (Prob. F-Stat = 0.762692) on market price per share since the p-value was greater than 5% level of significance. Additionally, the retention ratio has a significant effect (Prob. F-Stat = 0.000000) on the market price per share since the p-value was less than 5% level of significance. Also, dividend per share has an insignificant effect (Prob. F-Stat = 0.919624) on market price per share since the p-value was greater than 5% level of significance. The study recommended that manufacturing firms adopt a balanced dividend policy to enhance investors’ confidence while ensuring financial stability, and growth while corporate managers consider reinvestment opportunities alongside dividend payments to maximize shareholder wealth.

Keywords:

Dividend payout ratio, retention ratio, dividend per share, market price per share.

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