Effects of Dividend and Earnings on Stock Price Movement in Nigerian Banking Sector

Anthony Olugbenga Adaramola (), Adefemi Alamu Obalade (), Mary Oluwayemisi Akosile () and Grace Oluwafunmilayo Obalade ()
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Anthony Olugbenga Adaramola: Ekiti State University
Adefemi Alamu Obalade: Ekiti State University
Mary Oluwayemisi Akosile: Ekiti State University
Grace Oluwafunmilayo Obalade: Ekiti State University

Acta Universitatis Danubius. OEconomica, 2018, issue 14(5), 229-243

Abstract: The study assessed the effects of dividend and earnings on stock price behaviour in Nigerian banking sector. Banking sector-specific study on the subject remains underrepresented in spite of the importance of the sector in the nation’s financial system. The sample period spans from 2000 to 2014 and comprises of annual stock prices, dividend and earnings per share of 15 quoted banking firms. The pooled least square model, fixed effect model, random effect model and Hausman test were employed. The study found that current dividend has a significant positive effect on the stock prices of quoted deposit money banks while earnings and previous dividend payment have insignificant effect on banks’ stock prices in Nigeria. It implied that regular dividend payment is a significant factor that enhances shareholders wealth in Nigerian banking firms and established the truism of the dividend relevance school. Based on the findings of the study, bank management should be favourably disposed to payment of dividend to the shareholders because of its impact on the maximization of wealth which is the most important objective of the firm.

Keywords: Dividend; Earnings; Stock Price; Information content (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:dug:actaec:y:2018:i:5:p:229-243

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