Abstract:
This study was carried out to evaluate the impact of dividend policy on shareholders' wealth: a case study of some selected ten rural banks in Ghana. The financial statements of these rural banks from 2011 to 2017 were used. The research employed Panel Data to evaluate the data of which econometric estimation techniques namely fixed effects or random effects (as confirmed by the Hausman Test) were employed to estimate the connection between dividend policy and the wealth of shareholders. From the results, the analysis indicated a positive and statistically significant impact of dividend policy on shareholders' value. The practical implication is that rural banks perform better in terms of adding value to shareholders when they undertake decisions to increase dividend payments. Firm size, interest rate, and inflation were also found to adversely affect shareholders' worth. The findings also show that leverage has a statistically noteworthy positive connection with equity yields. The study, therefore, recommends that business institutions must bring up more crucial policies that will force managers to only speculate in areas that are lucrative in the long run since earning per share is a significant indicator of shareholders' wealth among rural banks. Also, rural banks must consider and practice sound debt management to reduce the amount of risk inherent in the leverage ratio of banks, which was found to statistically influence the value of shares. Again, the researchers recommend that policymakers must make policies targeted at increasing the dividend payments of rural banks.
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