DIVIDEND POLICY AND VALUE OF LISTED HEALTHCARE FIRMS IN NIGERIA

Abstract

This study examines the effect of dividend policy on value of Listed Healthcare Firms in Nigeria.
Modigliani and Miller dividend irrelevance model, the bird in hand theory and signaling theory
were employed to explain the concepts of dividend policy and firm value. Also, quantitative research
design was used to achieve the research objective of the study. Secondary data was extracted from
the sampled firms’ financial statements for a period of 5 years (2015 – 2019). The data was analyzed
using generalized leased square regression analysis. The study finds that dividend pay-out ratio has
a positive but not significant effect on firm value of listed healthcare companies in Nigeria. But,
dividend yield has a negative and significant effect on firm value of listed healthcare companies in
Nigeria. However, earning yield has a positive and significant effect on firm value of listed
healthcare companies in Nigeria. The study concludes that dividend policy has no significant
influence on firm value of listed healthcare companies in Nigeria, as emphasized by the dividend
irrelevance theory. Based on these findings, the study recommends that the management of listed
healthcare companies in Nigeria should prioritize on earnings yield when making dividend policy,
because it sends a good signal to the investors that, the firm is doing well and has a prosperous
future.