Dividend Payout Ratio and Firm Performance: Evidence from Listed Deposit Money Banks in Nigeria

Abstract

This study investigates the effect of Dividend Payout Ratio (DPR) on the performance of listed deposit money banks in Nigeria over the period 2015–2024. Using an ex-post facto research design, secondary data were collected from the audited annual reports of eleven (11) banks selected based on data availability. The relationship between DPR and firm performance, measured by financial indicators, was analysed using ordinary least squares (OLS) regression. The results indicate a negative but statistically insignificant relationship between DPR and firm performance (coefficient = −0.000034, p = 0.8718). The model exhibits a reasonable explanatory power, with R-squared of 0.5837 and an F-statistic of 13.9955 (p = 0.0000), confirming the overall significance of the regression. The findings suggest that dividend payout decisions have minimal influence on the performance of Nigerian banks, implying that management should focus on other factors, such as operational efficiency and capital management, to enhance firm performance. The study contributes to the understanding of dividend policy effects in emerging banking sectors and provides insights for investors and financial managers.