Dividend Policy and Shareholders’ Value: Evidence from Listed Companies in Ghana

Abstract This study examines the effect of dividend policy on shareholder value of listed companies in Ghana. It analyses the factors affecting dividend policy and how dividend policy affects shareholders’ value. Data from 2009 to 2014 financial reports of listed companies on the Ghana Stock Exchange were used. The data was analysed using pooled OLS panel regression. The findings reveal that ROE, firm age, tax, tangibility, GDP growth and interest rate are statistically significant in explaining dividend policy. The study suggests that firms consider the use of dividend yield as an appropriate measure when making choices in dividend policy. The study finds a positive relationship between dividend per share and shareholders’ value. More so, firms with higher dividend yield tend to reduce shareholders’ value, as confirmed by a negative and significant relationship between dividend yield and shareholders’ value. It concludes that dividend policy has a strong relationship with shareholders’ value. The study recommends that managers should embark on prudent investment activities that would generate higher returns (both dividend and capital gains) to shareholders in order to increase shareholder value.