The Relationship Between Agency Costs and Dividend Policy Amongst Listed Firms at Nairobi Securities Exchange

Abstract

The paper investigates the relationship between agency costs and dividend policy in the context of developing economy of Kenya. Dividend policy has been and still remains a tricky topic as the results are not conclusive as to allow a definite position to be made. Thus therefore, the study has used 10 year data from 2007 to 2016 based on a sample of 40 companies. This has seen employment multi linear regression technic to analyze the results which confirms the results of other studies that agency costs do influence dividend policy. The independent variables were positively correlated to the dependent variable, the dividend policy as expected but only asset utilization ratio and profitability had significant influence at P-Value of .011 and .002 respectively. The R2 of 40.2 percent of the model explain the effect of change influenced by the agency cost variables on dividend policy. The P. Value of F-test was significant at 0.003 (0.003 < .05) indicating linear relationship. Therefore, the study concluded that agency costs influences the dividend policy of firms listed on NSE