Document Type : Original Research


1 Department of Accounting, University of Calabar, Calabar, Nigeria

2 Department of Accounting, Faculty of Management Sciences, Federal University of Kashere, Gombe State, Nigeria.


Past studies have presented inconclusive results on the relationship between profitability and firm value, there is a need to take into consideration a moderating variable to strengthen the relationship. This study therefore, introduces dividend policy as moderator to examine its effect on the relationship between profitability and firm value of listed deposit money banks in Nigeria. The study adopted the Ex Facto-research design and the study used ten years, from 2012 to 2021. The study's population consisted of 15 listed banks on the floor of the Nigeria Exchange Group, and 12 were selected as study samples after filtering time frame. Secondary data were collected from audited financial report and accounts of the sample banks and the Nigeria Exchange Group's website. STATA was used to analyze the data, and the results revealed a negative direct link between profitability as assessed by return on assets and return on equity and firm value as measured by market value added. Furthermore, a higher dividend policy ratio strengthens the relationship between profitability and firm value. We add evidence that the dividend policy acts as a pure moderator in the banking industry. However, based on the findings, it is suggested that the regulatory authorities develop post-dividend payment legislation that can effectively contribute to the firm's dividend policy decision. The findings highlight the importance of profitability and dividend policy in maximizing corporate value in the banking industry.


Main Subjects


©2023 The Author(s). This is an open access article distributed under the terms of the Creative Commons Attribution (CC BY 4.0), which permits unrestricted use, distribution, and reproduction in any medium, as long as the original authors and source are cited. No permission is required from the authors or the publishers.

Ahmed Yahaya, O., Abubakar Nuhu, B., & Salawu Salihu, H. (n.d.). Impact of profitability on dividend payout of listed consumer goods firms in Nigeria.
Akhmadi, A., & Januarsi, Y. (2021). Profitability and firm value: Does dividend policy matter for Indonesian sustainable and responsible investment (SRI)-KEHATI listed firms? Economies, 9(4).
Andabai, P. W. (2020). Dividend policy and its impact on market value of deposit money banks in Nigeria. Global Journal of Education, Humanities and Management Sciences, 2(1), 1–9.
Andriani, S. D., Kusumastuti, R., & Hernando, R. (2023). Pengaruh Return on Equity (ROE), Earning Per Share (EPS) and Debt to Equity Ratio (DER) Terhadap Harga Saham (Studi Empiris Pada Perusahaan Industri Makanan Olahan yang Terdaftar di Bursa Efek Indonesia Tahun 2018–2020). Owner: Riset Dan Jurnal Akuntansi, 7(1), 333–345.
Arifianto, M., & Chabachid, M. (2016). Analisis faktor-faktor yang mempengaruhi nilai perusahaan (Studi kasus pada perusahaan yang terdaftar pada indeks LQ-45 periode 2011-2014). . Diponegoro Journal of Management, 5(1), 1–12.
Brigham, E. F., & Houston, J. F. (2006). Fundamentals of Financial Management:  Dasar-Dasar Manajemen Keuangan.
Charumathi, B., & Murali, K. (2016). On the determinants of firm value of Indian companies.
Consler, J., Lepak, G. M., & Havranek, S. F. (2011). Earnings per share versus cash flow per share as predictor of dividends per share. .Managerial Finance, 37(5), 482–488.
Data, A., Alhabsji, T., Mangesti, S., & Handayani, S. R. (2017). Effect of growth, liquidity, business risk and asset usage activity, toward capital structure, financial performance and corparate value (Study at Manufacturing Companies listed in indonesian stock exchange in 2010-2015). Euoropan Journal of Bussiness and Manajement, 9(24), 1–13.
Fairchild, R. J., Yilmaz G., & Yordying T. (2014). Corporate dividend policy in Thailand: Theory and evidence. International Review of Financial Analysis, 31, 51–129.
Gbalam, E., & Uzochukwu, A. (2020). Moderating effect of dividend policy and share prices of quoted firms in Nigeria. In International Journal of Research and Scientific Innovation (IJRSI) |: Vol. VII.
Ghalandari, K. (2013). The moderating effects of growth opportunities on the relationship between capital structure and dividend policy and ownership structure with firm value in Iran: Case study of Tehran securities exchange. Research Journal of Applied Sciences, Engineering and Technology, 5(1424), 31.
Gujurati, D. N. (2004). Basic Econometrics (Fourth Editions).
Guna, M., & Sampurno, R. (2018). Analysis of Factors Affecting Capital Structure. Journal of Accounting, Diponegoro University, 7(2), 133–147.
Handoko, P. (2017). The influence of firm’s size, growth, and profitability on firm value with capital structure as the mediator: A study on the agricultural firms listed in the Indonesian stock exchange. International Journal of Economics and Finance, 9(103), 10.
Hirdinis, M. (2019). Capital structure and firm size on firm value moderated by profitability. International Journal of Economics and Business Administration, 7(174), 91.
Hossin, Md. S., & Ahmed, Md. F. (2020). Dividend policy and stock price volatility in the Bangladesh capital market: An experimental analysis. Saudi Journal of Economics and Finance, 4(7), 359–367.
Koleosho, A. O., Akintoye, I. R., & Ajibade, A. T. (2022). The effect of dividend policy on share price volatility of some selected companies on the Nigerian exchange. Journal of Accounting, Business and Finance Research, 15(1), 10–20.
Li-Ju Chen Shun-Yu Chen, A. (n.d.). “The influence of profitability on firm value with capital structure as the mediator and firm size and industry as moderators.”
Liow, K. H. (2010). Firm value, growth, profitability and capital structure of listed real estate companies: An international perspective. Journal of Property Research, 27, 46–119.
Manurung, S. D., & Suhadak, & N. N. F. (2014). The influence of capital structure on profitability and firm value (A Study on food and beverage companies listed in Indonesia Stock Exchange 2010-2012). Jurnal Administrasi Bisnis (JAB), 72, 1–8.
Morakinyo, F. O., David, J. O., Adeleke, E. O., & Omojola, S. O. (2018). Determinants of dividend policy of listed deposit money banks in Nigeria. World Journal of Finance and Investment Research (International Institute of Academic Research and Development), 3(1), 25–40.
Mubaraq, M., Rahayu, S. M., Saifi, M., & Darmawan, A. (n.d.). The moderating effect of corporate governance on the relationship between dividend policy, capital structure, and firm value: Evidence from Indonesian manufacturer companies. European Journal of Molecular & Clinical Medicine.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.
Nugroho, W., & Abdani, F. (2017). The effect of profitability, dividend policy, leverage and investment decisions on firm value. El-Muhasaba Accounting Journal Airlangga University, 8–1.
Nwamaka, O. C., & Eze, B. (2017). Effect of dividend policies on firm value: Evidence from quoted firms in Nigeria. International Journal of Management Excellence, 8(2), 956–967.
Odum, A. N., Odum, C. G., Omeziri, R. I., & Egbunike, C. F. (2019). Impact of dividend payout ratio on the value of firm: A study of companies listed on the Nigerian stock exchange. Indonesian Journal of Contemporary Management Research, 1(1), 25–34.
Pandy, I. M. (2005). Financial Management. 9th Edition, Vikas Publishing, New Delhi.
Paulus Tahu, G., & Djoko Budi Susilo, D. (2017). Effect of liquidity, leverage and profitability to the firm value (dividend policy as moderating variable) in manufacturing company of Indonesia stock exchange.  Research Journal of Finance and Accounting, 8(18).
Pribadi, M. (2018). Effect of asset structure, firm size, liquidity, and profitability on firm value. Journal of the E-ISSN Conference Progress.
Reschiwati, R., Syahdina, A., & Handayani, S. (2020). Effect of liquidity, profitability, and size of companies on firm value. Utopia y Praxis Latinoamericana, 25(Extra 6), 325–332.
Septiani, N., & Suryana, L. (2018). Effect of Profitability, Firm size, Asset Structure, Business Risk, and Liquidity on the Capital Structure. E-Journal of Accounting, Udayana University, 22(3).
Sudiyatno, B., Puspitasari, E., Nurhayati, I., & Rijanti, T. (2021). The relationship between profitability and firm value: Evidence from manufacturing industry in Indonesia. International Journal of Financial Research, 12(3), 466.
Sudiyatno, B., Puspitasari, E., Suwarti, T., & Asyif, M. M. (2020). Determinants of firm value and profitability: Evidence from Indonesia. Journal of Asian Finance, Economics and Business, 7(11), 769–778.
Thanatawee, Y. (2014). Institutional ownership and firm value in Thailand. Asian Journal of Business and Accounting, 7, 1–22.
Udiyana, I. B. G., Astini, N. N. S., Parta, I. N., Laswitarni, N. K., & Wahyuni, L. A. (2022). Economic value added (EVA) and market value added (MVA) implications on stock returns. Jurnal Ekonomi & Bisnis JAGADITHA, 9(1), 15–22.
Ugwu, C. C., Onyeka, V. N., & Okwa, I. E. (2020). Dividend policy and corporate financial performance: Evidence from selected listed consumer goods firms in Nigeria. Journal of Economics and Business, 3(3).
Virginus, U. I. (n.d.). Moderating Dividend Policy on Firm Stock Price. International Network Organization for Scientific Research.
Wooldridge, J. M.-. (2011). Fractional response models with endogeneous explanatory variables and heterogeneity. In CHI11 Stata Conference (No. 12). Stata Users Group.
Yanti, I., & Darmayanti, N. (n.d.). The effect of profitability, firm size, capital structure and liquidation on firm value. Management E-Journal of Udayana University, 8(4), 12–21.