Dividend Policy and Shareholders’ Wealth in Nigerian Quoted Banks

Abstract

In 2008, the global financial meltdown was partly responsible for the bearish movement of stock prices in the Nigerian Stock Exchange. This shows that more than a single factor could be responsible for the movement of prices of quoted stocks. Company performance and information about the introduction of new technologies are among the factors that have significantly affected the market value of shares in the past. Therefore, this paper examines empirically, the implications of adopted dividend policies on the value of shareholders’ wealth and the extent to which dividend policy affects the market value of shares in quoted banks in Nigeria. The paper focuses on the situation before and after the financial meltdown. Correlation results of dividend paid in 2007-2010 and their corresponding market value showed that payment of dividend by quoted banks is relevant to their market value and the amount paid as dividend affects the value of their share. The paper also provides insight into the implications and effect’s of policy decisions as it affects dividend payout and dividend retained for further growth on shareholders’ wealth.