The Effect of Dividend Policy on the Share Price of Manufacturing Firms Listed on the Nairobi Securities Exchange
Abstract
Dividend policy is a widely researched concept in corporate finance. Various
researchers have conducted studies to understand the connection between
dividend policy and share price for firms in various industries. The objective of
the study was to examine the relationship between dividend policy and share
price for manufacturing companies listed at the Nairobi Securities Exchange.
Descriptive research design was used for the study. The population consisted all
manufacturing firms listed on the Nairobi securities exchange as at end of year
2016 and data for the companies for the period ranging from 2008 and 2016 was
collected using a data collection form from secondary sources of data and
analysed using SPSS. Data collected obtained was analysed using simple linear
regression and correlation analysis. The study determined that there exists a
positive but insignificant relationship between the dividend pay-out ratio of a
manufacturing organization and its share price. This therefore implies that
dividend policies that facilitate payment of dividends by firms cause a rise in
share price. The study also concluded that there exists a positive insignificant
relationship between profitability and share price and a negative insignificant
relationship between leverage and share price of a manufacturing firm. Finally,
the study recommended that similar studies should be carried out using
additional moderating variables and over a longer period.
Publisher
University of Nairobi
Subject
Nairobi Securities ExchangeRights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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