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

Author

Listed:
  • 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)

  • BELLO, Musibau

    (Department of Accounting, Faulty of Administration, Bingham University)

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.

Suggested Citation

  • Arumona. O. Jonah PhD & Orbunde B. Bemshima. PhD & BELLO, Musibau, 2024. "Capital Structure, Dividend Policy and Firm Value of Listed Non-Financial Companies in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(4), pages 1279-1296, April.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:4:p:1279-1296
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    References listed on IDEAS

    as
    1. Aduralere Opeyemi, OYELADE, 2019. "The Impact of Firm Size on Firms Performance in Nigeria: A Comparative Study of Selected Firms in the Building Industry in Nigeria," Asian Development Policy Review, Asian Economic and Social Society, vol. 7(1), pages 1-11.
    2. Rafiu Oyesola Salawu, 2009. "The Effect Of Capital Structure On Profitability: An Empirical Analysis Of Listed Firms In Nigeria," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 3(2), pages 121-129.
    3. IBIWOYE Ade & MOJEKWU Joseph & DANSU Francis, 2020. "Enterprise Risk Management Practices And Survival Of Small And Medium Scale Enterprises In Nigeria," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 15(1), pages 68-82, April.
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