Research purpose: This study investigates the relationship between dividend policy and share price volatility by using empirical data from firms listed on the Nigerian Exchange Limited.
Methodology: Panel regression analysis and Generalized Methods of Moments (GMM) was employed in analyzing the data spanning the period from 2011 to 2022. The findings of the study revealed a negative relationship between dividend yield and share price volatility. A statistically significant negative relationship was observed between dividend yield and share price.
Findings: Based on the research findings, a significant and positive relationship has been observed between the size of firms and the volatility of stock prices.
Recommendations: Consequently, the study suggests that stakeholders of publicly listed firms should ensure that the dividend payout ratio consistently and positively impacts the valuation of the company's common stock on the stock market. Stakeholders are advised to consistently monitor the annual dividend-to-share price ratio of a publicly traded firm, as it can significantly impact the value of the company's common shares on the stock market. Moreover, it is imperative for stakeholders in publicly listed corporations to formulate strategies for expanding their asset portfolio and establishing other business units. By adopting this approach, these enterprises have the potential to expand their customer base and enhance their financial performance, therefore augmenting the market value of the company's ordinary shares.