Effect of Dividend Policy on Firm Value of Selected Oil and Gas Companies in Nigeria

The study examined the effect of dividend policy on the firm value of listed oil and gas companies in Nigeria, using 5 listed oil and gas companies as samples for the study. The study specifically examines, determine the effect of dividend pay-out ratio on the market price per share of listed oil and gas companies Nigeria, and to examine the effect of dividend per share on the market price per share of listed oil and gas companies Nigeria and also, assess the effect of dividend retained ratio on the market price per share of listed oil and gas companies Nigeria. A sampled of five selected oil and gas companies in Nigeria for the past 10 years was used and the data were gathered from Annual Financial Reports of the selected oil and gas from 2012 to 2022. Dividend Policy as the independent variable was proxied by Dividend Per Share (DPS), Dividend Pay-out Ratio (DPR) and Retention Ratio (RR) which are major components of Dividend policy while market price per share (MPPS) was used as a proxy for Firm Value. The study made use of panel multiple regression estimation techniques of pooled OLS, Fixed Effects and Random Effects. The Hausman test suggests that the random effect model was the best. The regression analyses of dependent variables were done on the independent variable. The findings showed that an increase in DPR by 1%, will lead to 0.92% decrease in MPS, also, an increase in DPS by 1% will lead to an increase in MPS by 0.11% as an increase in RR by 1% will lead to an increase in MPS by 4.61% when all other variables are held constant. Based on the findings of the study, the study recommends that, Management of selected oil and gas companies should increase their level of dividend payments. This would enhance the way investors perceive their companies and would make investors willing to pay higher premiums for their companies hence creating wealth for their shareholders in terms of higher market price per share. Furthermore, management of selected oil and gas companies in Nigeria should engage in activities that will boost their company’s profit after tax (PAT) by investing in projects that will earn more returns for investors and minimizing activities that will reduce their returns, this will enable them have more earnings out of which they can pay dividends to their shareholders to enhance their value.