Research Article

Dividend Policy and Share Price Volatility: A Study of Nigerian Insurance Firms

Kabir Adedeji Ibrahim1*
1 Ahmadu Bello University, Zaria
* Corresponding author: ibrahimkabiradedeji@gmail.com
Published: Aug, 2025
DOI: 10.67203/jarmf.2025.75clxy15
Pages: 45-54

Abstract

This study investigated the relationship between dividend policy and share price volatility in the Nigerian insurance sector, a domain characterized by significant regulatory changes and market uncertainty. Grounded in signaling and agency cost theories, the study specifically examined the impact of dividend payout ratio and dividend yield on the volatility of listed insurance firms. Utilizing an ex-post facto research design, a longitudinal panel dataset was constructed and analyzed using a fixed effects regression model. The model controlled for firm size, leverage, profitability, and growth. The results revealed a statistically significant negative relationship between both measures of dividend policy and share price volatility. Specifically, higher dividend payout ratios and dividend yields were associated with lower share price volatility. The study also confirmed that larger firm size and higher profitability significantly reduced volatility, while increased leverage contributed to higher volatility. These findings lead to the rejection of the two null hypotheses and provide strong evidence against dividend irrelevance in this context. The study concludes that dividend policy serves as a critical strategic tool for reducing information asymmetry and mitigating agency costs, thereby stabilizing share prices in the Nigerian insurance industry. The findings offer valuable insights for corporate managers in formulating dividend strategies and for investors in risk assessment and portfolio construction

Keywords

Dividend Policy Share Price Volatility Dividend Payout Dividend Yield Insurance Firms Nigeria

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How to Cite

Ibrahim, K. A. (2025). Dividend Policy and Share Price Volatility: A Study of Nigerian Insurance Firms. Journal of Actuarial, Risk Management and Finance, 1(1), 45-54. https://doi.org/10.67203/jarmf.2025.75clxy15

K. A. Ibrahim, "Dividend Policy and Share Price Volatility: A Study of Nigerian Insurance Firms," Journal of Actuarial, Risk Management and Finance, vol. 1, no. 1, pp. 45-54, August 2025. doi: 10.67203/jarmf.2025.75clxy15

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