Includes CD

Thesis (MSc.) - CYPRUS INTERNATIONAL UNIVERSITY INSTITUTE OF GRADUATE STUDIES AND RESEARCH ACCOUNTING AND FINANCE DEPARTMENT

Includes REFERENCES: sheets 66-75

ABSTRACT According to empirical literature, dividend policy is becoming central to the management of companies in developing and emerging world countries. This policy essentially acts as a foundation for supporting an organization's financial mix, thus, it remains a very vital policy that is core in firms' administrative structure. The importance of dividend policy to corporate finance has drawn the interest of many scholars resulting to different conflicting findings. Though, several findings have been carried out round the globe concerning dividend policy but yet it stands as nut to crack in finance. Thus, the basic aim of this investigation is to ascertain the level of influence of dividend policy on firm's performance. Specifically, the study assesses if dividend pay-out ratio and earnings per share have a significant impact on return on equity and return on assets which are measures of the firm's performance. The study made use of panel data collected from the yearly financial reports of four Nigerian banks for a period of 10 years starting from 2009-2018. Two models were developed in this study. The performance of banks were measured using ROA (Return on Asset) and ROE (Return on Equity), which are the dependent variables and the independent variables are DPR (Dividend pay-out ratio) and EPS (earnings per Share). Econometrics method of Panel regression model was employed as the data analysis techniques. Hausman test was used to ascertain whether fixed effect model or random effect model is suitable for the analysing the models. The study discovered that Dividend pay-out ratio has a significant negative impact on Return on Equity (ROE). This implies that an increase in Dividend pay-out ratio will lead to decrease in ROA which was employed as the measure of bank's performance in Nigeria. Earnings per share (EPS) have a positive statistically significant influence on ROE. An increase in EPS will amount to an increment in ROE. Thus, an increase in earnings per share will enhance the performance of Banks in Nigeria. Furthermore, the study discovered that EPS has a positive statistically significant influence on ROA. An increase in EPS will amount to an increment in ROA. Thus, an increase in earnings per share will enhance the performance of Banks in Nigeria. The policy implication of this research is that it will assist managers who are keen in investment and profit making to further understand dividend policy and evolve suitable dividend policy models. The managers need to implement effective dividend policy that will enhance their performance. Keywords Dividend policy, Performance of banks, Nigerian Stock exchange