Effect Of Dividend Policy on Share Price Of Listed Conglomerate Firms in Nigeria

Abstract

This study examines the effect of dividend policy on the share price of listed conglomerate firms in Nigeria. The population of the study consists of six (6) listed conglomerate firms on the Nigerian Stock Exchange as at 31/12/2016. All the listed conglomerate firms were used due to small sample
size. Secondary data were collected from the sampled firms via their published audited financial statements for 10 years, ranging from 2007 to
2016. Multiple regression was used to analyze the data. The results show that dividend yield has a positive and significant effect on share prices
of the listed conglomerate firms in Nigeria, while earnings yield has a negative and significant effect on share prices of the listed conglomerate firms in Nigeria. However, dividend payout ratio has a negative insignificant effect on share prices of listed conglomerate firm in Nigeria. Based on the findings, the study concludes that the dividend policy has a significant effect on share price. The study, therefore, recommends that firms should adopt a policy of consistent dividends paid to shareholders as it will attract investors to increase their investment by way of buying more of the company’s stock. This is because investors see a firm that pays a high dividend as evidence of the company’s financial strength and well-being and concludes that management has positive expectations for future earnings which makes the stock more attractive.

Keywords: Share price, dividend yield, earnings yield, dividend payout, conglomerate firms