Trend of Dividends Policy in Nigeria

DIVIDEND POLICY AND SHAREHOLDERS WEALTH MAXIMIZATION:
A STUDY OF SELECTED QUOTED FIRMS ON THE NIGERIA STOCK EXCHANGE (NSE)

BY

ABDULLAHI BASHIR MUHAMMED
DEPARTMENT OF BANKING AND FINANCE
FACULTY OF MANAGEMENT SCIENCE
UNIVERSITY OF Abuja
PHONE NO: 08065727548,
E-MAIL: [e-mail]

ISMAILA DADDY ABUBAKAR
DEPARTMENT OFECONOMICS
UNIVERSITY OFABUJA
PHONE NO: 08030596520
E-MAIL: [e-mail]

AHMED TIJANI ABDULMAJEED
DEPARTMENT OF ECONOMICS
UNIVERSITY OF ABUJA
PHONE NO: 08036199688
E-MAIL: [e-mail]

Abstract
Dividend policy is the guiding principle that determines the portion of a company’s net profit after taxes that would be distributed to shareholders during a particular year. Dividend takes the form of cash or bonus shares. This study therefore explores the impact of dividend policy on shareholders wealth in some selected quoted firms. Econometrics method is employed with three distinct model specifications to reveal the impact of dividend policy on shareholders wealth and dividend per share as well as the impact of profit after tax on dividend per share for the period 2004-2010. The study reveals that dividend policy significantly impact as well as account for large variation in shareholders wealth and actual dividend payable per share. It also shows that profit after tax is a significant determinant of the magnitude and changes associated with dividend payable per share. Findings from the study lend support to the dividend relevance theory but cast serious doubt on the claim of dividend irrelevance theory. Therefore, cash dividend payment should be encouraged among firms while financial managers should strive hard to enhance shareholders wealth by employing relevant dividend policy and investment strategies that result in higher profitability and dividend per share.

INTRODUCTION
Stock exchange

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