EFFECT OF DIVIDEND POLICY ON THE MARKET VALUE OF SHARES (A CASE STUDY OF SELECTED FIRMS IN DELTA STATE).

This research explores the effect of Zenith Bank plc’s dividend policy on its stock price and market value as well as its compatibility with the best practices in the industry. A survey research strategy was utilized in this study, whereby data were collected from 109 individuals who constitute the management and staff of Zenith Bank, located in Asaba South, Aniocha-North, Delta State. The number of sample was 150, which was calculated using the Taro Yamane’s formula, while the Snowballing technique was employed in choosing the sample. The instruments for data collection were the research tools such as questionnaire, and interview. The researcher carried out a test sample experiment which gave a Cronbach’s Alpha reliability coefficient of 0.95. The basis of questionnaire instrument was validated by a senior research consultant. Data were analyzed using Zenith Bank basic market performance and dividend policy on market value. Also, participants’ opinions were divided about whether the bank goes in line with the best practices of the industry or not. Through the hypothesis testing, it was demonstrated that retained earnings are not substantially better than dividend payments in encouraging bank growth. According to the research, Zenith Bank policy was mainly motivated by the need to comply with regulations and profit considerations rather than the impact of the share price or the market value. Based on the findings, the researcher recommends that Zenith Bank should continue with a stable dividend policy, consider the option of raising the payout ratio, and be more clear in its finances in order to enhance investors’ trust and market stability.