An Evaluation of Number of Shares Outstanding, Ownership Structure and Firm Size on the Controlling Effect of Dividend Policy on Shareholders Wealth Volatility of Some Selected Companies Listed on the Nigerian Exchange (NGX)

Shareholders wealth volatility has exhibited different patterns in different global exchange markets including the Nigerian exchange. Unravelling attempts of the possible causes of this volatility have been made, as well as how the aforementioned are mitigated. These attempts are due to their implications on share valuation as well as the need to reduce market manipulations. Studies have shown that dividend decision has been one of the major puzzles yet unresolved regarding shareholders wealth volatility and there have been fewer studies in this regard, especially in developing economies like Nigeria. This study, therefore, examined the effect of dividend policy on shareholders wealth volatility of selected companies listed on the Nigerian Exchange.

The study adopted ex-post facto research design. The population of the study is 162 companies listed in the Nigerian Exchange as at 31 December 2020. The study sample consisted of 49 companies randomly selected. Data for the period 2010 - 2020 were collected from the NSE, and companies’ data on the Bloomberg Terminals and their official websites. Descriptive and inferential statistics were used to analyze the data. Inferential statistics resulted from Regression and Correlation analysis. The study found that the dividend policy exerted a statistically significant effect on Shareholders wealth Volatility (Adj.R2 = 0.303, W(3, 2156) = 95.82, p = 0.000). Firm Size, Number of Shares Outstanding and Ownership Structure jointly and significantly controlled the effect of Dividend Policy on Shareholders Wealth Volatility (∆Adj.R2 = 0.114, W (6, 2156) = 320.41, p = 0.000). The study concluded that dividend policy affects shareholders' wealth volatility. The study recommended that the companies should focus more on the payout ratio while investors should go for entities with constant dividend payout ratio. In addition, it further recommended that policy owners should enforce adherence to the minimum free float requirements of the Nigerian Exchange.