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Dividend Payout Ratio and Share Price: Evidence from Quoted Manufacturing Companies in Nigeria

Authors: NWAOBIA Apollos , & ALU Chituru

Publication Type: Journal article

Journal: Iosr Journal Of Business And Management (iosr-jbm)

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Abstract

In the business world today, investors have different expectations when it comes to dividend payment. While some prefer low payout ratio, others prefer high payout ratio and as a result, determining an optimum payout ratio that meets the investors’ expectations becomes a difficult task. The payout ratio derives a lot from the dividend policy of organizations and the dividend policy of an organization is believed to have an effect on the prices/values of its shares. This study aimed at evaluating the payout ratios of companies and the extent of their effects/relationship on the share price of Nigerian quoted manufacturing companies using five (5) of such companies for a ten years period, making a fifty (50) firm-year-observation. Ex-post facto design was adopted in the study and the data estimated using Ordinary Least Square method. The findings show that Payout Ratio (POR) has a positive insignificant effect on the share price (SHP) of quoted manufacturing companies while Earnings per Share (EPS) and Price Earnings ratio (PER) have a positive significant effect on the share price (SHP). However, considering the main model, EPS and PER still exert a positive significant influence on SHP while POR inversely influenced SHP. Hence, the overall/ combined influence of the independent variable (POR) and the control variables (EPS and PER) on the dependent variable (SHP) is positively and statistically significant which is in consonance with the a-priori expectation. Therefore, companies should be conscious of their dividend policy as investors are influenced by such; the company should take cognizance of the stakeholders varying interests while taking dividend decisions, however, maintaining a stable, regular policy will enhance their share price. Investors should not just base their investment decisions on a particular factor (POR, PER or EPS) as there are other factors that can influence a company’s share price. They should as well, diversify their investment.

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NWAOBIA,A. ALU,C. . (0000). Dividend Payout Ratio and Share Price: Evidence from Quoted Manufacturing Companies in Nigeria, 19 (), 30-30.

NWAOBIA,A. ALU,C. . "Dividend Payout Ratio and Share Price: Evidence from Quoted Manufacturing Companies in Nigeria" 19, no (), (0000): 30-30.

NWAOBIA,A. and ALU,C. and . (0000). Dividend Payout Ratio and Share Price: Evidence from Quoted Manufacturing Companies in Nigeria, 19 (), pp30-30.

NWAOBIAA, ALUC, . Dividend Payout Ratio and Share Price: Evidence from Quoted Manufacturing Companies in Nigeria. 0000, 19 ():30-30.

NWAOBIA,Apollos , and ALU,Chituru . "Dividend Payout Ratio and Share Price: Evidence from Quoted Manufacturing Companies in Nigeria", 19 . (0000) : 30-30.

N.Apollos & A.Chituru , "Dividend Payout Ratio and Share Price: Evidence from Quoted Manufacturing Companies in Nigeria" vol.19, no., pp. 30-30, 0000.

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