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Investigating the Effect of Dividend Policy on the Wealth of Stockholders of Listed Companies on the Ghana Stock Exchange

Author

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  • Evans Nkuah
  • Hadrat Yusif

Abstract

This paper has examined the impact of dividend policy on the wealth of stockholders of selected registered companies on the Ghana Stock Exchange (GSE). Secondary data were collected on 25 listed firms using annual reports from 2005 to 2011. The dependent variable was wealth of stockholders proxied by market price per stock. The explanatory variables included dividend per stock (DPS), retained earning per stock (REPS), financial leverage (FLEV), and price earning ratio (PER). Fixed-effect model was fitted to the data. The regression results showed that dividend payment, retained earning, and price earning ratio have significant positive impact on the stock market price. It was also found that the impact of dividend is more pronounced than that of retained earning in the context of companies registered on the Ghana Stock Exchange. It is therefore recommended that optimal trade-off between dividend payment and retained earning be established by corporate management to maximise the wealth of stockholders.Â

Suggested Citation

  • Evans Nkuah & Hadrat Yusif, 2016. "Investigating the Effect of Dividend Policy on the Wealth of Stockholders of Listed Companies on the Ghana Stock Exchange," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(7), pages 1-47, July.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:7:p:47
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    References listed on IDEAS

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    3. Alpa Dhanani, 2005. "Corporate Dividend Policy:," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(7-8), pages 1625-1672.
    4. Uwalomwa Uwuigbe & Olowe, Olusegun & Agu Godswill, 2012. "An Assessment of the Determinants of Share Price in Nigeria: A Study of Selected Listed Firms," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 8(6), pages 77-87, December.
    5. Alpa Dhanani, 2005. "Corporate Dividend Policy: The Views of British Financial Managers," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(7‐8), pages 1625-1672, September.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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