Dividend Policy and Share Price Volatility of Manufacturing Companies: A Comparative Analysis Between Nigeria and Global Marke

Abstract

This study examined the effect of dividend policy on share price volatility of publicly listed manufacturing companies. The study was carried out to comparatively examine how dividend policy influence volatility in share prices in Nigeria and three (3) global markets (United States of America, South Africa, and India). The study was hinged on dividend-relevance and signaling theories and ex-post facto research design was adopted. Secondary data on dividend payout, dividend yield, firm size, leverage, and share price were obtained from the selected markets from 2013-2023. Data obtained were analyzed via descriptive statistics alongside inferential statistics. First, the summary statistics indicate that Nigerian companies experience higher average share price volatility despite comparable firm size and leverage level with global peers. Second, the error correction model confirmed a long-run equilibrium relationship among the variables of study. In specific, a higher dividend payout ratio was found to significantly reduce share price volatility in the short run (p < 0.01), supporting the signaling theory. On the other hand, firm size negatively affects volatility reflecting greater investors’ confidence in larger firms. Conversely, leverage has a positive significant effect, indicating elevated financial risk while error correction term (−0.652, p < 0.01) suggests that 65.2% of short-term disequilibrium is corrected within a year. The findings reinforce the role of dividend policy in stabilizing share prices and building investor confidence. On the basis of the above, the study recommends consistent dividend practices, stronger regulatory oversight, and improved investor awareness to enhance capital market stability in emerging economies.