Testing Dividend Irrelevance Theory: Evidence from Nigeria Non-Finance Listed Firms

The study aims to test dividend irrelevance theory: evidence from Nigeria’s non-finance listed firms. The paper reviews related concepts, a few theories, and empirical to explore dividend mechanisms, analysis, and impact on a firm’s growth. Secondary data was retrieved from annual reports of fifteen (15) non-finance listed firms in the Nigeria Stock Exchange (officially Nigeria Exchange Group; during the fiscal periods of 2010 to 2022). A judgmental research sampling design was adopted to assess the variables using a panel data regression technique via Ordinary Least Square model, to estimate the specified equation. To observe the relationship between the dependent (explained); Dividend Payout (DIP) and selected independent (explanatory) variables; Earnings Yield of Firms Value (EYV) Data, Aggregate Asset Share prices (ASP) of firms, Market Value Added Firm Value (MVAA), Tobin Performance Data (TOBQ) and Price to Revenue Firm Valuation (PRV). Prob (Fstat.) at 0.000 proves that the logged exogenous variables are significant. T-statistic values show that logmarket value (0.000000) logearnings yield (eyv; -5.45), logprv (-0.504126), and logtobq (0.000000) are insignificant (at 5%). Interestingly, the R-squared and the Adjusted R-squared result of the logged independent variables both present a 100% estimate, depicting significance in the regressed model. However, policy implications and recommendations are anchored on the need to practically improve non-finance listed firms in the NSE by addressing the problems of agency cost, high tax rates on dividends, insider- information factors, unaccountable dividend payouts, balance sheet discrepancies amongst other macro-economic indicators that can threaten the development of non-finance quoted firms. All hands (researchers, analysts, policymakers) must be on deck in the areas of share price reactions, market base and performance as well as the under-development of the stock market as arguments of dividend irrelevance will remain a puzzle in the long run be it accepted or rejected.