Submit your papersSubmit Now
For Enquiries: [email protected]
IIARD LogoIIARD

Impact of Dividend Decisions on Shareholders Wealth: Evidence from Deposit Money Banks in Nigeria

OJIKA, Kingsley Ehichioya, and, OFEIMUN O. Godwin

Abstract

The study investigated the impact of dividend decisions on shareholders wealth of listed Deposit Money Banks in Nigeria. The study was anchored on the Signaling Theory and adopted a panel data research design because it combined both cross-sectional and time-series dimensions. The target population for the investigation comprised fifteen publicly listed deposit money banks operating in Nigeria as of December 31, 2025. A dataset consisting of 150 firm-year observations spanning the ten-year period from 2015 to 2024 was used for the analysis. Findings of the study indicate that dividend payout ratio has a significant positive effect on shareholder wealth among Nigerian deposit money banks, suggesting that distributing earnings to shareholders serves as a credible signal of financial strength and enhances firm value. In contrast, dividend yield and retained earnings ratio showed no statistically significant influence, indicating that investors in this context respond more to actual dividend payments than to yield levels or the proportion of earnings retained. In line with the findings, the study recommended that banks should prioritize maintaining a consistent and predictable dividend payout policy, as higher payouts positively signal financial strength and enhance shareholder wealth.

References

Ahmed, F., Advani, N., & Kanwal, S. (2018). Earnings management and dividend policy: Empirical evidence from major sectors of Pakistan. International Journal of Economics and Financial Issues, 8(3), 182–190. Alajekwu, U. B., & Ezeabasili, V. N. (2020). Dividend policy and stock market price volatility in the Nigerian stock market. British Journal of Management and Marketing Studies, 3(4), 37-52. Al-Shawreh, F. K. (2014). The effect of the company’s dividend policy on the share price volatility: A case study on the Jordanian market. International Journal of Economics and Finance, 6(8), 1–9. Apete, C., & Ogbotor, M. S. (2026). Firm attributes and dividend policy of Nigerian Banks. American Research Journal of Contemporary Issues, 4(1), 44- 52. https://doi.org/10.46654/dx2f4v68 Aymen, A., Youssef, S., & Karim, R. (2026). Strength in unity: Unraveling the determinants of dividend payouts across industries, International Review of Economics & Finance, 106(2) https://doi.org/10.1016/j.iref.2026.104977 Bhattacharya, S. (1979). Imperfect information, dividend policy, and 'the bird in the hand' fallacy. Bell Journal of Economics, 10(1), 259-270. Chakkravarthy, B., Irudaysamy, F. G., Elangovan, R., Rengaraju, N., & Parayitam, S. (2023). The relationship between promoter’s holding, institutional holdings, dividend payout ratio and firm value: moderating roles of firm size and firm age. Journal of Risk Financial Management, 16 (11), 1-15. Fujianti, L., Hubbansyah, A. K., Siswono, S., & Sinaga, L. (2021). The effect of managerial ownership, dividend policy and debt on firm value: The Indonesia Stock Exchange cases. Inquisitive Journal, 12(1), 45–58. Garcia-Amate, A., González-Tejero , C. B., Ramírez-Orellana , A., & Escobar, S. G. (2026). Dividend decisions in US Oil & Gas: Insights from the Upstream Sector. International Journal of Energy Economics and Policy, 16(2), 58–67. https://doi.org/10.32479/ijeep.22403 Johnson-Rokosu, S. F. (2025). Dividend policy and shareholder wealth in Nigerian listed companies: Navigating economic volatility and regulatory constraints. International Journal of Economics, Finance and Management, 10(4), 70-85 Kajola, S. O., & Adewumi, A. A. (2021). Dividend payout policy and firm financial performance: Evidence from Nigerian listed non-financial firms. Journal of International Finance, 9(3), 131-145. Khan, M. A., Khan, S., Arab, M., Qaiser Khan, M., & Ahmed, M. (2013). Impact of dividend policy on shareholder’s wealth: A study of hotel and travel sector of Sri Lanka. International Journal of Management and Business Research, 3(4), 345–352. Mugisha, F. (2020). Dividend policy and shareholder wealth: Evidence from Tanzania. University of Dar es Salaam. Omodero, C. O., & Amah, K. O. (2018). Analysis of dividend policy and its impact on shareholders wealth maximization in Nigerian firms (A study of brewery industry). International Journal of Economics and Financial Issues, 8(1), 59–65. Shakya, R., & Maharjan, S. (2021). Dividend policy and firm performance: Evidence from Nepalese microfinance institutions. Journal of Business and Management Research, 4(1), 22–31. online only Otuya, S., Ofeimun, G., Ogwu K. R., & Edike, S. (2023). dividend decisions and market value of firms in Nigeria, Journal of Accounting and Financial Management, 9(9), 28-35 Otuya, S., & Osiegbu, P. (2020). Shareholders’ Wealth and Enterprise Risk Management: A Study of Deposit Money Banks in Nigeria. The Nigerian Accountant, 51(8), 7-13 Prakash, P, & Navaneetha, B. (2026). Modelling the dividend determinants: an insight into panel data analysis of companies indexed in Bse Sensex in India. European Economic Letters , 16(1), 1370–1381. Retrieved from https://eelet.org.uk/index.php/journal/article/view/4286 Zeru, M. G., & Desalegn, G. (2020). The effect of retained earnings on financial performance of non-financial firms listed at Nairobi Securities Exchange, Kenya. International Journal of Finance and Accounting, 9(2), 45–52.

More Articles from IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH

Effect of Monetary Policy on Profitability of Deposit Money Banks in Nigeria

Author: Stephanie Nguhemen Gbande, Mike T. Soomiyol, Timothy Tyona, Gaius Msendoo Asombo

Cognitive Diversity and Performance of Deposit Money Banks in Nigeria

Author: 1Nwangwu, Okwudiri Iheanyi, 2 Pepple, Grace Jamie PhD

Banking Innovations and Industrial Sector Performance in Nigeria: Evidence from ARDL Model

Author: Peter Ngbede Ajam, Abiodun Edward Adelegan, Benson Emmanuel

Environmental Sustainability and Entrepreneurial Performance in Nigeria: A Case Study of Enugu State

Author: i, Azolike Nkiru Nkechi, ii, Okwor Emmanuel Ejimnkonye, iii, Eneaniofu Daniel Mmaduakonam