Effect of Dividend Policy on Share Price Volatility of Listed Non-Financial Firms in Nigeria

The relationship between dividend policy and share price behavior remains a central inquiry in corporate finance, with significant implications for investor wealth management and corporate capital structuring strategies in emerging markets such as Nigeria. This study examined the effect of dividend policy on share price volatility of listed non-financial firms on the Nigerian Exchange Group, covering the period from 2020 to 2024. The study was anchored on the dividend relevance theory proposed by Gordon and Lintner, which argues that dividend payments reduce investor uncertainty and thereby influence share prices. An ex-post facto research design was adopted, and the population comprised 98 listed non-financial firms. A purposive sample of 45 firms with consistent dividend payment records and complete financial data was selected. Secondary data were extracted from annual reports, the Nigerian Exchange Group database, and Bloomberg terminals. Data were analyzed using generalized method of moments (GMM) panel regression to control for endogeneity. Findings revealed that dividend yield was significantly negatively associated with share price volatility, while dividend payout ratio had a positive and significant effect on price stability. The study concluded that consistent dividend payment policies significantly dampen share price volatility by signaling financial health to the market. It was recommended that corporate boards should adopt stable and progressive dividend policies, particularly during periods of macroeconomic uncertainty, to reduce share price volatility.

Keywords: Dividend policy, share price volatility, dividend relevance theory, non-financial firms, Nigerian Exchange Group