Effect of working capital and dividend financing decision on shareholders’ value of listed healthcare firms in Nigeria

Abstract

In Nigeria, healthcare companies frequently face challenges in maintaining an effective balance between managing working capital and making dividend decisions. This imbalance can hinder their ability to enhance shareholder value. Poorly executed financial strategies not only constrain business expansion and reduce profitability but also erode the trust and confidence of investors. Therefore, this study examined the effect of working capital and dividend financing decisions on shareholders’ value of listed healthcare firms in Nigeria for the period 2014-2023. Longitudinal research design was adopted for the study. The population of the study consisted of seven (7) healthcare firms listed on the Nigerian Exchange Group (NGX). Since the population is not many, this study utilized a census sampling technique that used the population as a sample of the study. The data used in this study were secondary derived from the annual reports and accounts of healthcare firms that are listed on the NGX. The study used panel regression with respect to the use of Hausman specification test to settle on the use of fixed effect model. The regression result revealed that working capital, dividend equity financing and firm age have a positive and significant effect on shareholders’ value, while, firm size has no significant effect on shareholders’ value of listed healthcare firms in Nigeria. The study concludes that working capital, dividend financing and firm age increase the value of shareholders. Firm size does not influence shareholders’ value of listed healthcare firms in Nigeria. The study recommended that the management of Healthcare firms should implement real-time cash flow monitoring systems and adopt transparent, data-driven dividend frameworks. Investing in digital health innovations and robust governance will drive operational efficiency and long-term shareholder value.