Effect of dividend policy on financial performance of agricultural firms listed at the Nairobi securities exchange
Abstract
Dividend payment is the most crucial part in firm’s decision making as the management
has to come up with the decision which will benefit both the firm and the shareholders. As
such, the topic has been studied by numerous scholars but the results still remains
ambiguous. The research objective is to establish the effect of dividend policy on financial
performance of agricultural firms quoted at NSE. Descriptive research design and a total
of seven firms which make up the Agricultural segment at NSE formed the population of
the study. Secondary data was entirely adopted to carry out the study and the data covered
a period of ten year for the period between 2007 and 2016. Descriptive statistics was the
preferred method to carry out the analysis of the data. The results established a strong and
positive correlation linking dividend payout ratio and financial performance. Further, the
study found an insignificant positive correlation linking the mode of dividend payment and
the agricultural firms’ financial performance. Additionally, weak inverse correlation
linking financial leverage, firm size and the financial performance of the listed agricultural
firms was revealed. Finally, a strong direct association was established linking asset
structure and financial performance the quoted agricultural firms at the NSE. It concluded
that dividend payout significantly affects agricultural firms’ financial performance. It
further concluded that the financial performance of agricultural firms is significantly
influenced by their assets structure. The study recommended that the agricultural firms’
managements should come up with an optimal dividend policy and invest in adequate
assets to enhance profitability among these institutions.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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