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DIVIDEND POLICY AND SHARE PRICE VALUATION: A STUDY OF UNION BANK OF NIGERIA PLC

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Abstract

This study investigated the impact of dividend policy on share price valuation in Nigerian banks. This was done by utilizing data on Union Bank of Nigeria Plc, operating in the Nigerian economy. The data used for this study were market price, dividend yield and retention ratio. Market price was the dependent variable while dividend yield and retention ratio were included in the independent variables. In order to accomplish the set out objectives of this study, two research hypotheses (Ho1 – Ho2) were formulated which were tested via a number of analytical techniques. These were the ADF Unit Root Test and the ordinary least squares test. These tests were carried out with the aid of e-views software package. Based on the results obtained, the null forms of both hypotheses were rejected while the alternate forms were accepted. The results revealed that dividend yield had a significantly positive effect on share price while retention ratio was found to have a significantly negative
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