ABSTRACT
This study investigated dividend policy as a strategic tool of financing in corporate organizations in Nigeria. Specifically, it examined the nature of relationship between dividend payments and the value of the firms.
The study employed secondary annual data, collected from two selected commercial banks operating in Lagos State over a period of twenty years from 1988 to 2008. The secondary annual data were sourced from annual reports and statement of Accounts of the selected commercial banks and the central Bank of Nigeria
(Various issues). The study employed ordinary Least squares method to examine the effects of dividend policy on capital structure of corporate organizations in Nigeria. Simple Regression Analysis was also employed to analyze the relationship between dividend policy and capital structure of the sample commercial banks.
The empirical results showed that there is a relationship between earnings per share and dividend payout with co-efficient values of 138.200 (∞t= 8.120, P< 0.05). Also, the results revealed that payout ratio has a positive relationship with profit after tax with coefficient value of 30708.728 (∞t= 6.297, P< 0.05).
The study concludes that dividend policy decision is not a decision of the board of directors alone. The shareholders should be given recognition in "a policy like this because they are directly affected by the policy.
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