Dividend Policy and Financial Performance of Listed Pharmaceutical Firms in Nigeria

Abstract

The aim of corporate entities is to maximize the value of the investment of the shareholders in the firm. Managers pursue this goal through investment decisions, financial decisions and individual payment decisions. This study examined the effect of dividend policy on financial performance of listed pharmaceutical firm in Nigeria from 2015 to 2024. The sample of the study comprised of six (6) listed pharmaceutical firms on Nigeria Exchange (NGX). The study measured dividend policy using dividend per share, dividend pay-out ratio and dividend yield while the dependent variable (financial performance) was measured using Tobin Q. The data was obtained from the annual reports of the firms and Nigerian Exchange website. The results from the Robust Fixed effect regression showed that dividend per share has a positive and statistically significant (β = 1.04, p-value = 0.000) effect on financial performance, dividend payout ratio has a positive and statistically significant (β = 0.023, p-value = 0.032) effect on financial performance while dividend yield has a negative and statistically significant (β = -0.008, p-value = 0.001) effect on financial performance. The study concludes that dividend per share and dividend payout are relevant in increasing financial performance of listed pharmaceutical firm in Nigeria. The study therefore recommended among others that the management of Nigeria pharmaceutical firms should follow a dividend payout policy that will constantly involve paying dividend regularly.