THE RELATIONSHIP BETWEEN POLICY DIVIDENDS AND FIRMS’ PERFORMANCE ON GHANA STOCK EXCHANGE

business, Accounting

This study was to examine the impact of relationship between dividends policy and financial performance of listed banking and non-banking industries in Ghana. The research used secondary data obtained from the audited financial statements. To achieve this objective, data from 10 listed banks and non-banks were analysed for the period of seven years (2012-2018). E-views version 9 was used to estimate the regression results. The study revealed that dividend payout had no effect on the financial performance of listed banks and non-banking firms in Ghana. Thus amount of dividends paid does not affect the financial performance of firms but should pay dividends when they are financially strong. Also, findings of the study confirmed that dividend policy is a major factor that influence the financial performance of listed banks and non-banking firms. It was observed that dividend policy was highly significant predictor in explaining the firms’ performance (ROE). Other factors such as firm size, leverage and growth had insignificant impact on the return of equity of listed firms (banks and non-banking). Hence firms should ensure that they have good and effective strategies that will lead to increased total asset and other factors that will result to improved financial performance of banks and non-banking firms in the future. It is therefore, recommended that Banks and non-banking firms should invest in profitable assets that will yield higher returns in the future to enhance their financial performance and attract investments in the future. Moreover, the research findings revealed that there was no weighty impact of dividend payout on the financial performance and hence, investors should not rely on the amount of dividends paid to ascertain the financial stability of the firms.

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