EFFECT OF DIVIDEND POLICY ON SHARE PRICE OF PHARMACEUTICAL FIRMS IN NIGERIA

ABSTRACT Dividend policy is a vital and formal plan incorporated by boards of corporate businesses in their business strategy for making dividend decisions that will satisfy the shareholders and achieve consistent high net earnings, and high future growth prospects for their share price. Notwithstanding, the share prices of Nigeria pharmaceutical firms have been dwindling thereby exposing the firms to financial risks. The purpose of this study is to examine the effect of dividend policy on financial performance of listed pharmaceutical firms in Nigeria for period of fifteen years from 2010 to 2024 using a census sample of nine pharmaceutical firms listed on the main board of the Nigeria Exchange. The study deployed ex-post factor research design and a panel dataset of fifteen years were extracted from the annual accounts and reports of the census sample of the study. The panel dataset of the study was analysed using the Robust Ordinary Least Squares model estimation technique and the results shows that the association between the proxies of the explanatory variables comprised of dividend per share, dividend yield, dividend payout ratio and earnings yield and share price has regression coefficients of 5.99, 15.11, 1.66 and 11.81 with p-values of 0.000, 0.000, 0.003 and 0.000 respectively. Therefore, dividend policy variables have positive and significant effect on share prices of Nigeria pharmaceutical firms. Prior studies focused on dividend policy and financial performance, consequently, the findings of this study contributes to literature on the dividend policy and stock price nexus. The policy implication of this finding is that boards of Nigeria pharmaceutical firms should ensure payment of high dividends and monitor which enhance consistent growths on share prices and value of firms. Key Words: Dividend policy, share price, pharmaceutical firms, earnings yield, shareholders