Impact of dividend policy on the performance and value of firms listed on the ghana stock exchange
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Date
2023
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KNUST
Abstract
This study examines the impact of dividend policy on the financial performance and value of listed firms in Ghana. The study employs purposive sampling technique to select 15 firms listed on the Ghana Stock Exchange and uses secondary data from the audited financial statement of the firms that meet the inclusion criteria of the study. The study uses an ordinary least square regression model to establish the relationship between dividend policy and financial performance and firm value and simultaneously examines the effect of other control variables (leverage, liquidity, and firm size) on financial performance and firm value. From the findings of the study, the researcher concludes that dividend policy has a significant impact of the financial performance of listed firms in Ghana, thus firms perform well when dividend shareholders receive increases. More so, the findings also indicate that larger firms tend to perform better than firms of small sizes. Also, the researcher concludes that firms with higher levels of liquidity tend to perform better than firms with lower levels of liquidity. Furthermore, firms with a higher degree of leverage, thus using debt to finance their operations, perform better financially. Notwithstanding this, on the basis of the findings of this study, the researcher concludes that firms with higher degree of leverage experience a significant decrease in the valuation of the firm. However, liquidity does not have any significant effect on the value of listed firms in Ghana. Financial managers need to carefully evaluate the level of leverage that is right for their business, weighing the possible advantages of debt financing operations against the impact on the firm's valuation. For the firm to avoid taking on excessive risk and to maintain its overall financial stability, a careful approach to controlling leverage is essential. Financial managers should evaluate the company's financial standing and, if feasible, explore raising dividend payments. Since dividend policy has a substantial impact on the financial performance of listed corporations in Ghana, this may help the company attract investors and possibly improve its financial performance.
Description
A thesis submitted to the department of accounting and Finance, kwame nkrumah university of science and Technology in fulfilment of the requirements for the degree of master of business administration in finance