Dividend Policy, Liquidity and Firm Value of Consumer Goods Industry Companies in Nigeria

Abstract

The focus of this study is to determine the effect of dividend policy and liquidity on firm

value. The research was conducted on companies in the consumer goods industry sector on

the Nigeria Exchange Group for the 2012-2021 period. The population used in conducting

this study was obtained from the consumer goods industrial sector companies listed on the

bourse of the Nigeria Exchange Group (NGX Group) which have a total of 25 companies.

Purposive sampling technique was used and 17 companies were selected that met the

condition of regular dividend payment. Panel least regression data analysis technique was

used for the study. Secondary data used were obtained from audited financial statements of

the sampled companies for the period and Nigerian Exchange Group factbook. The results

showed that dividend policy, liquidity and market risk had positive significant relationship

with firm value at 5.8198:0.000; 15:6395:0.000 and 1.2805:0.000 respectively indicating 1%

significance level. Free cashflow had positive insignificant relationship with firm value while

ownership concentration has negative but insignificant causal effect on firm value. R², the

coefficient of determination of 0.8329 reflects that the model explanatory variables account

for 83.29% of value of price to book value, the explained variable. It is recommended that

adequate level of profitability should be a priority to enable payment of dividend. Liquidity

position should be at the acceptable levels and market risk should not exceed tolerance limit.