Capital Structure, Dividend Policy and Firm Value of Listed Non-Financial Companies in Nigeria

Arumona. O. Jonah PhD, Orbunde B. Bemshima. PhD and Musibau Bello
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Arumona. O. Jonah PhD: Head of Department, Department of Accounting, Faculty of Administration, Bingham University
Orbunde B. Bemshima. PhD: Department of Accounting, Faulty of Administration, Bingham University
Musibau Bello: Department of Accounting, Faulty of Administration, Bingham University

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 4, 1279-1296

Abstract: A balance is required for optimal capital structure and dividend policy becomes crucial, as an imbalance could result in increased debt burdens, higher interest payments, and reduced overall profitability. Additionally, such misalignment might erode investor confidence, causing fluctuations in stock prices and, in extreme cases, leading to a decline in market capitalization. Given the foregoing, this study examined the effect of capital structure and dividend policy and firm value of listed non-financial firms in Nigeria. To achieve these objectives, ex post research design was employed and the study utilized seventy (70) selected listed non-financial firms that had consistently published their audited annual financial reports from 2011 to 2022. The study analyzed the data using panel multiple regression technique with the help of statistical tools (E-view 10). The result of the study revealed that debt-to-equity ratio has negative and insignificant effect on firm value of listed non-financial firms. On the other hand, the study found that dividend per share has a significant effect on firm value. Thus, the study recommended that financial management decisions related to capital structure of non- financial companies should take into account the trade-off between potential benefits and risks associated with debt financing. Also, financial managers are advised to integrate thoughtful dividend management seamlessly into their broader corporate finance strategy. This proactive and adaptive approach ensures that companies remain competitive, responsive to changing circumstances, and capable of optimizing their overall value in the market.

Date: 2024
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