Volume 7 No 2 (2018)   |   ISSN 2158-8708 (online)   |   DOI 10.5195/emaj.2018.134  |   http://emaj.pitt.edu 

 

 
 

 

 

 

 

The Influence of Dividend Payments on Share Price in Manufacturing 

Firms Quoted on the Nigerian Stock Exchange 
 
 

Samson Ogege 
University of Lagos, Nigeria | ogegesamson@yahoo.com 

  
 

Abstract 

This paper examined the influence of dividend payments on the price of share of quoted manufacturing companies in 

Nigeria employing panel data with 125 data observations spanning from 2014-2018.  A purposeful sampling technique was 

used to select twenty-five manufacturing companies investigated from the Nigerian stock market. A linear regression model 

was specified and was further broken down into a bivariate regression model and the method of least square regression was 

adopted for data analysis. The outcome of the panel regression indicated that, dividend per share has a positive influence on 

the price of shares of high and low geared manufacturing firms; earnings per shares positively influence the shares price of 

both dividend and non-dividend paying manufacturing companies; dividend yield show an adverse effect on the share price 

of new and old manufacturing companies; credit risk was found to positively impact share price of big manufacturing 

companies, but adversely affect the share price of small manufacturing companies in Nigeria. In view of the outcomes of 

the analysis, the study therefore recommended that a conducive and favorable business environment should be created by 

the government for both old and new manufacturing companies in Nigeria to thrive. Also, credit risk should be effectively 

and efficiently managed by small manufacturing companies in particular in order to eliminate its adverse influence on their 

share price. 

 

Keywords: Finance, Dividend Payments, Share Price, Manufacturing Firms, Nigeria   

 

 
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Volume 10 No 2 (2020)   |   ISSN 2158-8708 (online)   |   DOI 10.5195/emaj.2020.196  |   http://emaj.pitt.edu 

 

 

 

The Influence of Dividend Payments on Share Price in Manufacturing Firms Quoted on the Nigerian Stock 

Exchange 

Page |64| Emerging Markets Journal 

The Influence of Dividend 

Payments on Share Price in 

Manufacturing Firms Quoted 

on the Nigerian Stock 

Exchange 
 

 

Samson Ogege 

 

 
I. Introduction 

 

The basic concept of dividend payout as well 

as its policy has remained one of the major issues 

generating controversy in corporate finance. Since the 

inception of joint stock firms, the payment of dividend 

by firms has become an interesting issue in financial 

literature. Over the years, the modeling as well as the 

evaluation of corporate dividend payout and returns had 

been engaged by financial economists as they influence 

the stock price of firms in Nigeria (AlQudah et al., 2015). 

In a simple form, dividend is the apportionment of 

returns or earnings in real assets amidst the company’s 

shareholders in relation to their share ownership. The 

payment of dividend is quite sacrosanct for the effective 

and efficient management of a business operation to 

ensure its survival and it has been viewed as one of the 

most vital tools for assessing the existence and 

performance of corporate organizations. A great value is 

performed by dividends to restore confidence to the 

shareholders and it is extremely significant as a result of 

its negative influence on the values of share. A stable 

policy on dividend is anticipated to bring about a higher 

price of share due to the high level investors’ confidence 

regarding the potential of the firm to make higher profit 

in the future. However, the firm still needs to be assessed 

in a wider scope. Basically, at the end of every financial 

period, firms assess their financial performance by 

determining whether earnings had been actualized or not. 

The payment of dividend continues to be 

viewed as one of the major significant financial policies 

not just only from the firms’ outlook, but as well from 

that of the employees, the consumers, shareholders, 

regulatory bodies as well as the government (Jakata and 

Nyamugure, 2015). It is generally specified as a nominal 

value percentage of the ordinary share capital of firm or 

as a stable amount per share. In all, when the market is 

greatly influenced either positively or negatively, it may 

as well pose a similar influenced on the payment and 

policies of dividend. AlQudah et al. (2015) posited that, 

the rationale behind the dividend payout of firms is the 

need for cash and/or to avoid the cost of agency and 

minimizing the insecurity of investors. Sharma (2011) 

indicated that, earnings and dividend per share are key 

components that provide vital information regarding the 

share price’s value in the market. 

Previous studies conducted in Nigeria on 

dividend payout appeared to have revealed that, the 

dividend payment trend had been inconsistent in various 

sectors of the economy. Jakata and Nyamugure (2015) 

came up with the conclusion that, the association of 

dividend payment with equity on shares prices has 

produced conflicting results based on the sector the study 

is conducted. However, considering the manufacturing 

industry, the payment of dividend has been inconsistent. 

Thus, the challenges identified prompted the researcher 

to carry out this study with the main purpose of 

ascertaining the influence of dividend payment on share 

prices of the quoted manufacturing firms.  

 

II. Literature Review 

 

Based on this theory, Lintner (1956) and 

Gordon (1959) formally contended that, there is need for 

the investors to actualize their wealth for the purpose of 

consumption and hence prefer cash dividends to capital 

gains. However, it was theoretically opposed by Miller 

and Modigliani (1961) in their seminar paper revealing 

that dividends and capital gains are substituted for each 

other. Again, ‘home-made dividends’ could be produced 

by the investors by issuing stock if that is what they have 

decided to do. This theory is majorly adopted by firms 

for justifying the essence of having a well-established 

dividend policy in operation. Traditionally, the Bird in 

Hand Theory posits that, the share prices of firms can be 

influenced via variation in their policies of dividend. The 

theory further asserts that, dividend is preferred by the 

investors to capital gain for that ‘A bird in the hand is 

worth more than one in the bush’. That is to say, 

dividend today is more preferred than capital gain that is 

not certain in the future (Gordon, 1963). 

Several empirical studies had been conducted 

home and abroad on the association of dividend payment 

and policy with share price as to whether there exists a 

positive or negative association between the variables.  

Few of such studies are empirically reviewed below: 

A study was conducted in Nigeria by 

Augustine et al. (2019) investigating the association of 

the ratio of dividend payout with the value of brewery 

and beverage companies quoted on the Nigerian Stock 

Exchange (NSE). The study also examined other factors 

that influence the value of firm. However, the variables 

(cash holding, profitability, size of company as well as 

leverage and dividend policy ratio) were regarded as the 

factors influencing the value of companies. OLS 

regression analysis was adopted to analyze the secondary 

data collected from the firms spanning from 2007-2016. 

It was established that, profitability and leverage ratio 

have significant and positive influence on the companies’ 

value. This implies that, only the variables of Firm 

Leverage, and Profit after Tax are significant factors that 

drive firm value in both breweries and beverages 

companies among listed companies in Nigeria. Hence, 

the work suggested that, policies which will optimize the 

leverage ratio of companies should be put in place and 

that companies which wish to optimize their values 

should ensure that profit after tax is maximized. 

Adopting a panel least square regressions 

method, Alfred et al. (2019) appraised the dividend 

policy influence on the prices of stock of ten consumer 

goods companies listed on the Nigerian stock exchange. 

The secondary data adopted were collected from the 

financial statements of the firms investigated spanning 



Volume 10 No 2 (2020)   |   ISSN 2158-8708 (online)   |   DOI 10.5195/emaj.2020.196  |   http://emaj.pitt.edu 

 

 

Samson Ogege 

Emerging Markets Journal | P a g e 6 5  

from 2011 to 2015 and established that dividend yield 

influences market price share insignificantly and 

adversely; earnings per share and dividend pay-out ratio 

influenced market price share significantly and positively 

while net asset per share show non-significant positive 

impact on market price share. In view of the outcomes of 

the analysis, it was inferred that the policy of dividend 

has the potential to impact on the prices of stock in the 

consumer goods sector pointing out that the irrelevancy 

theory of dividends does not take effect as the case may 

be in Nigeria. 

By investigating about two hundred and 

twenty-eight quoted companies in the Amman Stock 

Exchange, Muhannad et al. (2018) obtained the data 

spanning from 2010 to 2016 to ascertain the influence of 

dividend policy on the fluctuation of stock price of the 

study sample. With the adoption of Pearson correlation 

analysis and the estimation of panel GMM to investigate 

the association between the observed variables, it was 

established that dividend policy and payout, dividend 

yield have adverse significant causality with stock price 

fluctuation. It therefore means that the more the 

companies increase their dividend payout and dividend 

yield, there will be more reduction in the fluctuation of 

the price of stock which invariably brings about a more 

stable stock price. Hence, the study recommended that 

dividend policy that is favorable to both the current and 

future investors should be formulated and maintained by 

the companies quoted on the Amman Stock Exchange. 

Between 2006 and 2015, a similar study was 

conducted in Nairobi for a case of six insurance firms 

quoted on the Nairobi Securities Exchange and it was 

revealed based on the regression analysis adopted by 

Joseph and Symon (2017) that earnings per share, 

dividend yield and inflation significantly and positively 

influenced the share price value. Based on the outcomes 

established, it is inferred that dividend policies should be 

thoroughly and accurately considered by the insurance 

companies as a result of their potentials to impact the 

price of share by making the price of stock to either 

increase or decrease based on the dividends declared by 

the firms’ management. Thus, it is highly required by the 

management to be honest and responsive in dividends 

declaration. 

To further ascertain how the payment of 

dividend affects the share value, Akram (2017) sourced 

for data from 44 companies quoted on Istanbul Stock 

Exchange spanning from 2007-2015 and a fixed effect 

analysis was employed. The result from the analysis 

indicated that, the payment of dividend has a significant 

and positive association with companies’ value. Thus, the 

outcomes of this study upheld the agency cost theory 

inferred that, the irrelevance hypothesis of dividends is 

not valid considering the companies quoted on the ISE. 

Ahmed et al. (2017) conducted a study on the 

association of dividend policy with the stock prices 

belonging to a firm in the banking sector. The data 

between 2005 and 2014 regarding the financial structure 

as well as the basic dividend policies of the firms 

investigated were sourced from the financial statement of 

five banks selected and the websites of State Bank of 

Pakistan and Karachi Stock Exchange. The outcomes 

indicated that, a sound dividend policy plays a significant 

function in alluring potential investors as well as making 

a substantial contribution towards enhancing the financial 

structure of companies. Furthermore, it was revealed by 

the findings that dividend policies might pose a 

significant and positive effect on the prices of stock if 

considered and executed after thorough investigation of 

financial structure as well as the dividend policies of 

various companies. 

  

III. Methodology 

 

Secondary data were employed in this study 

and had been collected from the financial statement and 

average share prices per year of the chosen 

manufacturing companies quoted on the Nigerian stock 

exchange spanning from 2004-2018. The study covers 

manufacturing companies that specialize in consumer 

goods, industrial goods, technological development, oil 

and gas, health care and basic materials. Panel Ordinary 

Least Square Technique was adopted for analyzing the 

panel data in order to assess the influence and the 

association between the variables observed in this 

research. 

 

On the basis of this literature, the model was formulated 

as follows:  

 

SP =f (DPS, EPS, DY, 

CR)………………………………………….…Eq. 1 

 

                                
                  

 

Where:    SP -Share Price; DPS - Dividend Per Share; 

EPS - Earnings Per Share; DY - Dividend Yield; CR 

- Credit Risk ; B0 = Slope of the regression; B1,2,3 - 

Coefficient of the variables  

U     =  Error term 

Model Specification in Linear Form  

 

IV. Data Analysis 

Regression Analysis for High Geared Manufacturing 

Firms 

 

Investigate the influence of dividend per share on the 

price of share of high geared manufacturing firms in 

Nigeria. 

 

SPt = β0 + β1DPS+ 

µ…………………………………………………………

……Eq.3 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Volume 10 No 2 (2020)   |   ISSN 2158-8708 (online)   |   DOI 10.5195/emaj.2020.196  |   http://emaj.pitt.edu 

 

 

The Influence of Dividend Payments on Share Price in Manufacturing Firms Quoted on the Nigerian Stock 

Exchange  

Page |66| Emerging Markets Journal 

Table 1: Regression Result of High Geared 

Manufacturing Firms 

 

 
 

Source: Eview7, 2019  

 

Analysis for Low Geared Manufacturing Firms 

 

Restatement of Objective One  

Assess the influence of dividend per share on the price of 

share of quoted low geared manufacturing firms in 

Nigeria. 

 

SPt = β0 + β1DPS+ 

µ…………………………………………………Eq.4 

 

Table 2: Regression Outcome 

 

 
 

Source: Eview7, 2019 

 

Analysis for Dividend Paying Manufacturing Firms 

 

Restatement of Objective Two  

Understand the impact of earnings per share on the price 

of share of quoted dividend paying manufacturing firms 

in Nigeria. 

 

SPt = β0 + β1EPS + 

µ…………………………………………………Eq.5 

 

Table 3: Regression Outcome for Dividend Paying 

Firms 

 
 

Analysis for Non-Dividend Paying Manufacturing Firms 

 

Restatement of Objective Two 

 

Understand the impact of earnings per share on the price 

of share of listed non-dividend paying manufacturing 

companies in Nigeria. 

 

SPt = β0 + β1EPS + 

µ………………………………………………Eq.6 

 

Table 4: Regression Outcome for Non- Dividend 

Paying Manufacturing Firms 

 

 
Analysis for Old Manufacturing Firms 

 

The firms presented in the data presentation were 

regrouped into old and new manufacturing firms based 

on their year of operation as manufacturing firms in 

Nigeria.  

 

Restatement of Objective Three 

 

Find out the influence of dividend yield on the price of 

share of quoted old manufacturing firms in Nigeria. 



Volume 10 No 2 (2020)   |   ISSN 2158-8708 (online)   |   DOI 10.5195/emaj.2020.196  |   http://emaj.pitt.edu 

 

 

Samson Ogege 

Emerging Markets Journal | P a g e 6 7  

SPt = β0 + β1DY + 

µ…………………………………………….Eq.7 

 

Table 5: Regression Outcome for Old Manufacturing 

Firms 

 

 
 

Source: Eview7, 2019 

 

Analysis for New Manufacturing Firms 

 

Restatement of Objective Three 

 

Find out how dividend yield influences the share price of 

quoted new manufacturing firms in Nigeria. 

 

SPt = β0 + β1DY + 

µ…………………………………………… Eq.8 

 

Table 6: Regression Outcome for New Manufacturing 

Firms 

 

 
 

Source: Eview7, 2019 

 

Analysis for Big Manufacturing Firms 

 

Restatement of Objective Four 

 

Assess how credit risk influences the share price of 

quoted big and small manufacturing firms in Nigeria. 

  

SPt = β0 + β1CR + 

µ………………………………………………Eq.9 

Table 7:  Regression Outcome for Big Manufacturing 

Firms  

 

 
 

Source: Eview7, 2019 

 

Analysis for Small Manufacturing Firms 

 

Restatement of Objective Four 

 

Assess how credit risk affects the share price of quoted 

small manufacturing firms in Nigeria. 

 

SPt = β0 + β1CR + 

µ………………………………………………Eq. 10 

 

Table 8: Regression Outcome for Small 

Manufacturing Firms 

 

 
 

Source: Eview7, 2019 

 

IV. Discussion of Findings 

  

This study appraises the influence of dividend 

payment on share prices of the quoted manufacturing 

firms in Nigeria. In response to Table 1, dividend per 

share was revealed to positively influence share price of 

high geared manufacturing firms in Nigeria. This implies 

that, 1% rise in DPS will bring about a rise in SP.  

Similarly, Table 2 revealed that dividend per share 

positively influence share price of low geared 

manufacturing firms in Nigeria. This implies that, 1% 



Volume 10 No 2 (2020)   |   ISSN 2158-8708 (online)   |   DOI 10.5195/emaj.2020.196  |   http://emaj.pitt.edu 

 

 

The Influence of Dividend Payments on Share Price in Manufacturing Firms Quoted on the Nigerian Stock 

Exchange  

Page |68| Emerging Markets Journal 

rise in DPS will bring about a rise in SP.  This result is 

line with the outcome of Mohannad et al (2018) although 

it did not indicate if the firms were highly geared or not.   

Table 3 EPS was revealed to positively 

influence SP of dividend paying manufacturing firms in 

Nigeria. This signifies that for every 1% rise in EPS, 

there will be a similar increase in SP. This outcome 

corroborates with the result of the study conducted by 

Iqbal et al. (2015) inferring that, EPS determines 

significantly the share prices and the availability of future 

funds for dividend payment and reinvestment. Regarding 

the non-dividend paying manufacturing firms, it was 

revealed in Table 4 that, EPS positively influences SP. 

This signifies that for every 1% rise in EPS, there will be 

a similar increase in SP. This outcome is consistent with 

the study of Ishfaq (2018). It therefore implies that, EPS 

has the potential of raising future capital for reinvestment 

in non-dividend paying firms. 

As regard to Table 5, DY was revealed a have 

an adverse effect on SP of old manufacturing firms in 

Nigeria. This implies that when DY increases by 1%, the 

SP will decrease by 1%.  However, this outcome does 

not corroborate with the result of Freshia and Pauline 

(2016) where in this study, there is positive association 

of DY with SP. Considering new manufacturing firms, 

Table 6 established that, DY adversely influences SP. 

This implies that when DY increases by 1%, the SP will 

decrease by 1%.  However, this outcome does not 

corroborate with the result of Freshia and Pauline (2016) 

where in this study, there is a positive association 

between DY and SP.  

Table 7 reveals that, CR positively influences 

SP of big manufacturing firms in Nigeria. This implies 

that when CR increases by 1%, the SP will increase by 

1%. Literature does not empirically emphasize the effect 

of credit risk on share prices of manufacturing firms in 

Nigeria. However, Table 8 revealed that CR negatively 

influences SP of small manufacturing firms in Nigeria. 

This implies that when CR increases by 1%, the SP will 

decrease by 1%. 

The variables used in the study are dividend 

per share, earnings per share, dividend yield and credit 

risk. In as much as these variables used in the study are 

important, some are given optimum attention in 

investment decisions. In finance, dividend per share had 

been given optimum attention because of its cash flow 

nature. Only dividend announcement had caused great 

influence in share price in any capital market. Finance 

analysts over time have used dividend announcement in 

the form of insider information to manipulate the share 

price. The arguments of dividend relevance surpass the 

argument of dividend irrelevance. However, dividend 

argument had led to dividend theory. Most academic 

studies on dividend payment included dividend per share 

as relevant independent variable. 

  

V. Conclusion and Recommendations 

 

Based on the findings from the analysis, it can 

be observed that all the variables adopted in the model 

employed are significant. Hence, this led the researcher 

to draw a conclusion that, the findings achieved the 

research objectives. This study makes a significant 

contribution to the body of knowledge by empirically 

revealing the evidence on how dividend payment 

influences the price of share of manufacturing companies 

in Nigeria.  

In view of the study’s analysis, the coefficient 

of determination reveals more than average percent 

signifying that the dependent variable captured the level 

of significance of the independents variables. On this 

note, we can draw our conclusion that the manufacturing 

companies that are highly geared have a better model 

than the low geared companies, while dividends paying 

manufacturing companies have a better model compared 

to non-dividend paying manufacturing companies. 

Inclusively, the new and old manufacturing companies 

have a fair model implying that in totality, the 

manufacturing companies in Nigeria are not operating at 

the optimal level. Big and small manufacturing 

companies are progressing as the model of big 

manufacturing companies out-way the model of small 

manufacturing, as revealed by the coefficient of 

determination (R-square).   

Parallel to the findings discovered in this work, 

it is therefore recommended that credit risk should be 

effectively and efficiently managed by small 

manufacturing companies in particular in order to 

eliminate its adverse influence on their share price. Also, 

the manufacturing companies that are not paying 

dividend with adequate earnings per share should be 

dividend in order to make the sector attractive to the 

investors. The government should provide the enabling 

environment for manufacturing companies to thrive and 

survive in Nigeria. Finally, well-reputable companies 

should be eager to pay out smooth dividends rather than 

investing more on the growth opportunities 

 

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Volume 10 No 2 (2020)   |   ISSN 2158-8708 (online)   |   DOI 10.5195/emaj.2020.196  |   http://emaj.pitt.edu 

 

 

Samson Ogege 

Emerging Markets Journal | P a g e 6 9  

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