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Effect of Dividend Payout and Yield on Market Value of Listed Insurance Firms in Nigeria

Ebirim Caroline Chikodi and Mohammed Bala Inuwa

Department of Accounting Bingham University, Karu, Nasarawa State, Nigeria

Email: carolineebirim@gmail.com, Phone No. 08061100115

ABSTRACT

Despite extensive research on market value of firms and how dividend policies impact it, there is a limited understanding of how the market value of listed insurance firms in Nigeria is specifically affected by the dividend payout and dividend yield policies of the firm. This study seeks to address this gap by examining how dividend payout and dividend yield ratio affects market value of listed insurance firms in Nigeria. To achieve these objectives, longitudinal research design was employed, and the study utilized ten (10) listed insurance firms that had consistently published their audited annual financial reports from 2009 to 2023 and analyzed the data using panel multiple regression technique with the help of e-view 12 statistical tools. The result of the study shows that dividend payout ratio had negative and insignificant effect on market value of listed insurance firms in Nigeria, while dividend yield ratio had positive but significant effect on market value of listed insurance firms in Nigeria. In conclusion, these results highlight the nuanced role of dividend policies in influencing investor perceptions and firm valuation, suggesting that while high dividend yields can enhance market confidence and valuation, the effect of payout ratios on Price to Book Value (PBV) is less clear and may depend on additional contextual factors. The study therefore recommends that firms with high Dividend Payout Ratios (DPR) should clearly communicate their growth and reinvestment strategies to investors to mitigate perceptions of limited growth prospects and potentially enhance market valuation. Also, listed insurance firms should leverage the positive relationship between Dividend Yield (DY) and market value by implementing stable and attractive dividend policies, signaling financial stability and profitability to boost investor confidence and market valuation.

Keywords: Dividend Payout Ratio, Dividend Yield, Market Value, Price to Book Value and Firm Size.

CITE AS: Ebirim Caroline Chikodi and Mohammed Bala Inuwa (2024). Effect of Dividend Payout and Yield on Market Value of Listed Insurance Firms in Nigeria. IDOSR JOURNAL OF ARTS AND HUMANITIES 10(2):15-32. https://doi.org/10.59298/IDOSRJAH/2024/102.15320000