Information Content of Dividend: Evidence from Nigeria

Abstract

This paper seeks to investigate whether dividend payments possess significant information content capable of causing changes in stock prices in Nigerian stock exchange. Applying the panel model of the Generalized Least Square (GLS) regression which allows for the influence of individual firm's industrial characteristics, this study has helped in contributing to the basket of knowledge needed globally especially from a developing country like Nigeria. The findings indicate that changes in dividend payment merely create occasions for changes in stock prices. There is no sufficient evidence to suggest that stock price changes are caused by dividend payments. However, the study reveals that records of dividend payments Granger cause stock prices and causation runs from dividend payment to stock prices.

Keywords: Causality; Stock Prices; Dividend Payments; Information Content; Stock Market