The Effect of Stock Liquidity on Dividend Payout Policy for Banks Listed at the Nairobi Securities Exchange in Kenya.
Abstract
Stock liquidity is described as the propensity of a stock to be converted to cash easily and
quickly. The trading of shares is usually done at the Stock Markets. Investors value
shares that have higher dividend returns. A stock that is illiquid but pays higher dividends
will be sought after compared to the more liquid ones. The main aim of the study was to
find out the effect of stock liquidity on dividend policies for banks listed at the Nairobi
Securities Exchange between 2013 and 2017. The stock turnover rate and dividend
payout ratio were used as proxies for stock liquidity and dividend payout policy
respectively. The research study also used some control variables of firm leverage and
firm profitability which affect the firm’s ability to pay dividends. Descriptive design
method was used where data was pulled out from the CMA and NSE and was analyzed
and the findings were that the stock turnover rate, the predictor variable was insignificant
to the outcome variable dividend policy. The outcomes of the study support that stock
liquidity cannot predict the banks’ dividend payout policy at the NSE.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
The following license files are associated with this item: