FACTORS INFLUENCING DIVIDEND PAYOUT DECISION OF FINANCIAL AND NON-FINANCIAL COMPANIES LISTED ON NAIROBI SECURITIES EXCHANGE

Authors

  • Samuel Thuo Gakumo
  • Dr. C. Nanjala

DOI:

https://doi.org/10.47672/ajf.116

Keywords:

Dividend payout, financial companies, financial leverage, business risk

Abstract

Purpose: The purpose of this study was to examine the factors influencing dividend payout decision of financial and non-financial companies listed on Nairobi securities exchange.

Methodology: The study conducted a census on 33 financial and non-financial firms listed on the NSE consistently since 2003 to 2012.Panel data was analyzed using random effects Tobit and random affects probit models. The findings indicated that four variables; financial leverage, business risk, profitability and Earnings per share significantly influenced the amount of dividend paid.

Results: The findings indicated that four variables; financial leverage, business risk, profitability and Earnings per share significantly influenced the amount of dividend paid. Based on the findings, the study concluded that EPS, financial leverage and business risk play a key role in making the decision to pay or not to pay dividends. Earnings per share influences the decision to pay positively while both financial leverage and business risk influences the decision to pay dividends negatively.

Unique contribution to theory, practice and policy: The study also recommends that managers may use the study findings when making the dividend payout policies since they will be given useful information regarding which factors they may consider when determining the dividend payouts

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Author Biographies

Samuel Thuo Gakumo

Post graduate student

Dr. C. Nanjala

Lecturer, KCA University

References

Kuria, J. N. (2012). A study on dividend policies, growth in assets, return on assets and return on equity at the Nairobi stock exchange. Nairobi: University Of Nairobi.

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Maina, S.M., (2002).The Empirical Relationship between Dividends and Investments Decisions of Firms Quoted at the NSE. Unpublished MBA Research Project, UON.

Malik, F., Guo, S., & Rehma, s. (2013). Factors Influencing corporate dividend payout decisions of Financial and non-financial firms. Research Journal of Finance and Accounting, 35-47.

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Weston, F., & Brigham, F. (2001). Managerial Finance. New York: The Dryden Press.

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Published

2017-01-06

How to Cite

Gakumo, S. T., & Nanjala, D. C. (2017). FACTORS INFLUENCING DIVIDEND PAYOUT DECISION OF FINANCIAL AND NON-FINANCIAL COMPANIES LISTED ON NAIROBI SECURITIES EXCHANGE. American Journal of Finance, 1(2), 16–29. https://doi.org/10.47672/ajf.116

Issue

Vol. 1 No. 2 (2016)

Section

Articles

License

Copyright (c) 2017 Samuel Thuo Gakumo, Dr. C. Nanjala

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.