DIVIDEND POLICY AND SHARE PRICE CHANGES IN THE STOCK MARKET: EVIDENCE FROM NIGERIA.

¹Aribaba, F.O, ²Ahmodu, O.L, ³Ogbeide, S.O, ⁴Olaleye, J.O.

^1,3&4Department of Accounting and Finance, Elizade University, Ilara- Mokin, Ondo State, Nigeria.

²Department of Management Sciences, Wesley University, Ondo.

Email: folusoaribaba2003@yahoo.com, ahmoduolamidelateef10@gmail.com,sunnyogbeide2017@gmail.com

ABSTRACT

The study examines dividend policy and share price of quoted companies in the Nigerian Stock Market. The study employs the ex-post facto research design. A sample of 15 companies was examined between 2008-2014 financial year using panel Estimated Generalized Least Squares (EGLS) regression with fixed effect. The study found dividend policy and dividend yield contributes to share price reduction and were not statistically significant. The effect of dividend per share is negative and is statistically not significant across the quoted firms. Earnings per share were observed to result to positively engender share price changes was not statistically significant; dividend pay-out and firm size positively influence changes of share prices of the quoted companies in Nigerian Stock Market. Based on these findings, the study therefore recommends that listed firms in the Nigerian Stock Market have regularly choose to ascertain the sensitivity of investors to policies on dividend perhaps annually or semi-annually in order to avoid sending wrong signal to the market which could further hamper the value of the shares.

Keywords: Dividend Policy, Share Price Change, Earnings Per Share, and Firm Size.