Abstract
Over the past decades, extensive research has been carried out in various countries regarding the signaling effect of dividend. Most of these studies were in support of the signaling hypothesis that corporate dividend payments play a vital role as an information transmission mechanism and can indicate the future prospect of the firm. It is an recognition of this crucial role that dividend policy of firm plays in the economic life of investors and related parties that it became necessary to examine this issue as it relates to corporate firms in the Nigerian Stock market, on the largest stock markets in Africa. The objective of this study was to determine how changes in corporate dividend policy affect the future prospect of firms in Nigeria. The sample considered ten (10) banks listed in the Nigerian Stock Exchange Market and the annual reports were observed for a five years 2007 – 2011. the study revealed that corporate dividend policy serves as a information signal to investors and related parties in Nigeria. That corporate dividend indicate future prosperity of the firm and vice versa. Lastly, that changes in dividend of corporate bodies do not affect the value of the firm.