THE DIVIDEND RELEVANCE THEORY AND FIRM VALUE OF LISTED NIGERIAN DEPOSIT MONEY BANKS (DMBs)

Abstract

The main objective of every firm is to create corporate value. Studies have shown that shareholders benefit more from the firm as its value increases. The two opposing views on dividend policy and its effect on share price are the dividend relevance theory posited by Lintner (1956) and the dividend irrelevance theory put forth by Miller and Modigliani (1961). The puzzle of the relevance of dividend payment on a firm’s value remains inconclusive and controversial, despite the substantial body of literature on dividend policy, thus requiring continuous improvement. It is on this premise of inconclusive results that spurred the current study. The study uses secondary data on listed Deposit Money Banks in Nigeria (DMBs), which spans a ten (10) year period from 2011 to 2020. The data was estimated using the panel regression analysis, and the findings showed that dividend payout significantly and positively influenced the firm value of listed banks in Nigeria. The study recommends that investors exhibit care in studying and understanding the dividend policy of firms to guide their investment decisions.