MODERATING ROLE OF DIVIDEND POLICY ON THE RELATIONSHIP BETWEEN PROFITABILITY AND FIRM VALUE OF LISTED CONSUMER GOODS FIRMS IN NIGERIA

This research examines how dividend policy influences the connection between profitability and firm value among Nigerian consumer goods firms listed on the stock exchange from 2012 to 2023. Financial data were extracted from annual reports of companies listed on the Nigerian Exchange Group, with a final sample of 13 firms selected from an initial population of 21 based on data availability. The study employed panel data analysis, with the fixed effects model identified as the most suitable estimation technique. Profitability was proxied by return on assets (ROA), dividend policy by payout ratio (DPR), and firm value by Tobin’s Q, while firm size served as a control variable. Key findings indicate that while profitability (ROA) exhibits a positive but statistically insignificant association with firm value, dividend policy significantly enhances this relationship, demonstrating a robust moderating effect. Based on these results, three strategic recommendations emerge; that corporate leaders should integrate non-financial value drivers—such as marketing, innovation, and workforce development—alongside financial performance; dividend policies should be reevaluated, as excessive payouts do not automatically translate to higher valuation; and, that optimal firm value creation requires a calibrated equilibrium between earnings retention and distribution.

0 17 May, 2025

pg: 13

JBMIC PORTAL SYSTEM

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