Effects Of Dividend Policy On Share Pricing Of UBA Stock: 1979-1993

Abstract

There has been a lot of controversy over what influences stock prices most on the stock exchange. While some analysis believe that dividend policy is responsible for the stock price movements on the stock exchange, others claim that dividend policy is irrelevant to share price valuation. They are of the opinion that what matters to the investors are the financial performance of the companies and not the dividend payouts.

It is the objective of the study to find out whether it is dividend policy or earnings that is mostly responsible for stock price behaviour on the Nigerian Stock Exchange. The work also tried to identify other factors that may significantly affect stock price movement.

Although a lot of work has been done in this field, the research focused attention on United Bank for Africa (UBA) stock so as to ascertain the reasons for the movement of its stock price in recent years.

The work has been divided into six chapters. The first chapter focused on the definition of the research problem. A general background information were given in the chapter two to give an insight into factors that can affect stock prices and corporate dividend policy. While chapter three dealt on the review of relevant literature. Chapter four covers the methodology applied in carrying out the research, while presentation and analysis of results is contained in chapter five, In the last chapter the policy recommendation and conclusion were presented.

The study concluded that dividend policy of UBA had a greater impact on its stock price than earnings. Also, it was found that the volume of transaction significantly affected price movement while the ratios of capital to asset was not significant and therefore does not affect stock price.

However it is hope that this study would be found useful by shareholders capital market participants and the management of United Bank for Africa (UBA) Nigeria. Plc.