IMPACT OF CORPORATE FINANCIAL NEED ON DIVIDENT POLICY (original) (raw)

The biggest motivating element for investing in a company's stock is the dividend. Dividend payments, on the other hand, are beneficial to shareholders since they make investors happy. However, paying a dividend reduces the internal funding needed to invest in golden prospects, slowing the firm's growth and lowering the value of the retained stock. Therefore, the study aimed at examining corporate financial needs and dividend policy of banks in Nigeria. A descriptive research design was adopted to empirically analyse the banks' financial needs and dividend policy using United Bank for Africa (UBA) and First Bank of Nigeria (FBN) plc target samples. The two banks were selected based on best of judgment sampling technique. The hypotheses were tested using Pearson Correlation and Linear Regression. The findings show that; dividends pay-out have negative relationship with financial needs of the banks, retain earnings does not have significance positive effect on the banks' capitalization drive and dividends pay-out have significant positive effect on the shares prices of the bank. It was recommending that; the level of debts should be reduce to at least, 65% of their total assets in order to increase their profit after tax, the banks should not majorly depend on retain earning for their capitalization drive and they should maintain their current level of dividend payout.