Abstract:

One disturbing uncertainty in the stock market is stock market volatility. When a change in stock price a preceded by a similar directional change, it causes variation in stock volatility, creating stock riskiness. The inherent volatility in all stock market scares low risk takers from the financial market and is capable of deterring investments. One of the factors that drives investors’ reactions to stock pricings is the dividend policy. This study examined the effect of dividend policy on the volatility stock prices of firms quoted on the Nigerien Stock Exchange for the period spanning eleven (11) years from 2006 to 2016. The study employed the panel data regression technique to analyse data obtained from 60 firms, comparing 19 financial and 41 non-financial. Stock volatility was measured as the standard deviation of stock market prices while dividend policies were captured as dividend payout ratio, and dividend yield with five moderating variables (firm size, growth, leverage, earnings volatility and financial crisis). Findings revealed that dividend payout ratio has significant positive effect on stock market volatility of non-financial firms, and positive but insignificant effect for the financial firms. However, dividend yield has insignificant negative effect on stock market volatility for both financial and non-financial services firms. It becomes advisable that investors in the financial services sub-sector should ignore dividend policies, in share pricing and evaluation of stock riskiness.