Abstract:
The most debated issue or controversy in the field of finance is over the
impact of dividend policy on the performance of a company (Brealey and Myers
2002). Different views exist regarding the impact of dividend policy on the
performance of firms. Some empiricists argue for dividends irrelevance while
others take the opposite view and maintain that dividends do have relevance. This
current study has been undertaken aiming at evaluating the impact of dividend
policy on performance in the context of selected rural banks in Ghana. Seven rural
banks were selected in Ghana. The study has covered secondary data and primary
data. Quantitative tools such as percentages, averages, tables and chats were used
in the analysis of the findings. At the end, it revealed that there is a positive
correlation between dividend policy and rural banks performance. Also, the rural
banks with a higher dividend payout have their performance or share value
higher. Besides, the study recommends that dividend paying firms should
continue to maintain a steady growth in dividends unless there is a very good
reason to make profit and expand. Also, because there are different shareholders
preferences, firms should find out from their shareholders what suit their
preferences before dividends policy decisions are made.
