Dividend Policy and Share Price Volatility in Nigeria

  • CA Okafor
  • CO Mgbame
  • AM Chijoke-Mgbame


The purpose of this paper is to examine the relationship between dividend policy and share price changes in the Nigerian stock market. A multiple regression analysis is used to explore the association between share price changes and both dividend yield and dividend payout ratio. Of the two measures of dividend policy, dividend yield showed a general negative impact on share price risk. The other measure of dividend policy, dividend payout ratio, showed negative influences in some years and positive influences on others though all were at lower significant levels. The study supports the fact that dividend policy is relevant in determining share price changes for a sample of firms listed in the Nigerian Stock Exchange. The challenge for managements/accountants is to generally improve the quality of the financial statements to avoid producing wrong information which could lead to wrong decisions by investors.

Keywords: Dividend policy, share price changes, dividend yield, dividend payout ratio.


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eISSN: 1596-8308