Dividend Policy and Market Value Synthesis in the Manufacturing Sector: A Critical Assessment of Some Selected Quoted Companies in Nigeria

Abstract

In various places around the world, there have been constantly mixed opinions of the empirical findings about topics relating to dividend policy, specifically, the extent to which dividend policy influence market value and other capital market financial indicators like earning per share and profitability. These controversies provided a strong motivation to examine this topic. This research work was conducted using 15 (Fifteen) manufacturing companies quoted on Nigeria Stock exchange. The research work used secondary data available on the annual reports of these companies, which were obtained from website-friendly, Stock broking firms spanning a period of 10 years (i.e. 2004 – 2013) Furthermore, the study used Multiple regression, Durbin Watson and Multi colinearity tests to analyse the various data considered in this study . This analysis revealed that significant relationship exists between dividend policy and market value when Durbin Watson and Multi-Colinearity statistical tools were used but the result was opposite when Regression analysis was used because the P-value Obtained (i.e.0.312,0.876,0.823,0.528,0.221,0.249,0.196,0.091) were greater than the 5% alpha value specified in SPSS for this analysis, the study therefore recommends that for investors to understand the behaviour of dividend policy they must consider more than one statistical method so as to ensure they maximize the return on their investment.

Keywords: Dividend, Retained Earnings, Market share price, profitability, manufacturing sector.