Empirical Analysis of Stock Market Efficiency on Gross Domestic Product (GDP) in Nigeria
DOI:
https://doi.org/10.70641/ajbds.v1i2.106Keywords:
Dividend Policy, Dividend Payout Ratio, Dividend Yield, Earnings Per Share, Firms’ EarningsAbstract
This study examines the effect of dividend policy measured by dividend payout ratio and dividend yield on firms’ earnings measured by earnings per share in Nigeria. Dividend policy is a critical financial decision influencing firms’ performance, yet there remains considerable debate regarding its impact on corporate earnings. This research specifically focuses on 40 listed firms in Nigeria across various sectors from the financial years 2018 to 2021, resulting in 160 firm-year observations. The study employs Panel Estimated Generalized Least Squares with cross-section random effects to analyze the relationship between dividend policy and firm earnings. Findings reveal a weak negative relationship between dividend distributions and firms' earnings, with share prices experiencing a downward trend following negative dividend announcements. Additionally, the study finds that dividend yield has an insignificant effect on firms’ earnings, suggesting that share price movements in the Nigerian stock market are not strongly tied to dividend policy decisions. However, a strong positive relationship exists between earnings per share and firms' earnings, as share prices tend to rise following positive dividend announcements. Based on these findings, the study recommends that firms maintain a stable and consistent dividend payout policy to enhance investor confidence and stock market performance. Since dividend announcements influence share price movements, listed companies should strategically manage their dividend policies to maximize shareholder value and sustain high share prices on the Nigerian Exchange Group.
References
Adamu, J. A., & Sanni. I. (2005). Stock market development and Nigerian economy growth. Journal of Economic and Allied Field 2(2), 116-132. https://ijbssnet.com/journals
Asante, S., Agyapong, D., & Anokye, A. M. (2011). Bank competition, stock market and economic growth in Ghana. Ucc.edu.gh. http://hdl.handle.net/123456789/5308 DOI: https://doi.org/10.5430/ijba.v2n4p33
Ajayi, J. A; Oshadare, S. A., Ajala, A. O. (2018). Semi-strong form of efficiency of Nigerian stock market: An empirical test in the context of input and output index, International Journal of Financial Research, 9(1), 115-120. DOI: https://doi.org/10.5430/ijfr.v9n1p115 Scopus indexed DOI: https://doi.org/10.5430/ijfr.v9n1p115
Atoyebi, K. O., Ishola, S. A., Kadiri, K. I., Adekunjo, F. O., & Ogundeji, M.O. (2013). Capital market and economic growth in Nigeria: An empirical analysis. IOSR Journal of Humanities and Social Science (IOSRJHSS), 6(6), 60-68. www.Iosrjournals.Org DOI: https://doi.org/10.9790/0837-0666068
Barro, R. J. (1996). Determinants of economic growth: A cross-country empirical study. National Bureau of Economic Research, 1(1), 14. DOI: https://doi.org/10.3386/w5698
Central Bank of Nigeria (2020). Annual Report and Statement of Accounts. https://www.cbn.gov.ng/documents/cbnannualreports.asp
Edame, G. E. & Okoro, U. (2013) The impact of capital market and economic growth in Nigeria. Journal of Public Policy and Administration Research, 3(9), 2-15. https://core.ac.uk/download/pdf/234669001.pdf
Enoruwa, K. O; Ezuem, D. M. . & Nwani, C. O. (2019). Electronic channels and bank performance: Empirical evidence from Nigeria. SSRG International Journal of Economics and Management Studies, 6(5), 37-46. Doi: 10.14445/23939125/IJEMS-V6I5P107 DOI: https://doi.org/10.14445/23939125/IJEMS-V6I5P107
Ewah, S. O., Esang, A. E., & Bassey, J. U. (2009). Appraisal of capital market efficiency on economic growth in Nigeria. International Journal of Business and Management, 4(12), 219-225. DOI: https://doi.org/10.5539/ijbm.v4n12p219
Kolapo F. T., & Adaramola, A. O. (2012). The impact of the Nigerian capital market on economic growth (1990-2010). International Journal of Developing Societies, 1(1),11-19. DOI: https://doi.org/10.11634/21681783150436
Nazir, M. S., Nawaz, M. M., & Gilani, U. J. (2010). Relationship between economic growth and stock market development. African journal of business management, 4(16), 3473.
Odo, S. I., Anoke, C. I., Onyeisi, O. S., & Chukwu, B. C. (2017). Capital market indicators
and economic growth in Nigeria; An autoregressive distributed lag (ARDL) model. Asian
Journal of Economics, Business and Accounting, 3(2), 1-16.
https://doi.org/10.9734/AJEBA/2017/32549 DOI: https://doi.org/10.9734/AJEBA/2017/32549
Okpoto, S. I. (2015, August). Capital market and Nigeria’s Economic Growth (1980-2013). Journal of Policy and Development Studies. https://www.arabianjbmr.com/pdfs/JPDS_VOL_9_4/8.pdf DOI: https://doi.org/10.12816/0016778
Omankhanlen, Alexander. (2011). The Effect of Exchange Rate and Inflation on Foreign Direct Investment and Its Relationship with Economic Growth in Nigeria. Annals of Dunărea de Jos University. Fascicle I : Economics and Applied Informatics. 1.
Popoola, O. R., Ejemeyovwi, O. J., Alege, O. P., Adu, O., & Onabote, A. A. (2017). Stock market and economic growth in Nigeria. International Journal of English Literature and Social Sciences, 2(6), 97-106 DOI: https://doi.org/10.24001/ijels.2.6.15
Siyanbola, T. T., Okolie, O. R., & Ogbebor, P. I. (2020). Market opening and economic growth in Nigeria. Journal of Economics and International Finance, 12(1), 20–28. https://doi.org/10.5897/jeif2019.1019 DOI: https://doi.org/10.5897/JEIF2019.1019
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 John Ayodele Ajayi, Daniel Anifowose Abolaji, Robert Adetunji
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
This work is licensed under a 