ANALYSIS OF THE DYNAMIC RELATIONSHIP AMONG STOCK LIQUIDITY, DIVIDEND POLICY AND FINANCIAL PERFORMANCE OF NON-FINANCIAL QUOTED COMPANIES IN NIGERIA

Abstract

The study adopted longitudinal research design. Secondary source of data collection were employed. A sample of 50 non-financial quoted companies out of the population of 109 non-financial quoted companies was selected using purposive sampling technique. Selection was based on the availability of required financial information in their annual reports for the sample periods and consistent trading on the floor of Nigerian stock exchange market. Annual data on variables such as turnover ratio, dividend payment ratio, return on asset, firm age, financial leverage, firm size, investment opportunity and cash holding were obtained from the Audited Annual Reports of selected non-financial quoted companies and Nigeria Stock Exchange Facts-book. Data collected were analysed using panel vector autoregression (VAR), vector autoregression lag, impulse response function (IRF) and variance decomposition (VD). The results showed that dividend pay-out ratio DPR does not response to shock in both turnover ratio TOR and return on asset ROA. Also, the turnover ratio TOR model revealed that return on asset ROA and dividend pay-out ratio DPR failed to induce the reaction of stock liquidity. It is therefore concluded that each variable only responds to shock from itself and does not respond to shock from other variables.