Relationship between inflation and dividend payout for companies listed at the Nairobi Securities Exchange
View/ Open
Date
2013-04-22Author
Ochieng, Duncan Elly
Mlangi, Mambo
Type
ArticleLanguage
enMetadata
Show full item recordAbstract
Earlier studies conducted have a mixed opinion on the effect of inflation on dividend payout. Due to the nominal
increase in the volumes of money, which result from the increase in inflation, at least for a short run, some
studies have concluded that inflation has a positive effect on dividend payout. However, in the long run, studies
in general seem to show that the inflation rate and stock returns are negatively related. This study, which
considers a sample of all the firms that consistently paid dividend between the year 2002 to 2011 and were
listed at the Nairobi Security Exchange showed that, inflation rate has no impact on the dividend payout.
However, other variables considered, that is, the spot Dollar exchange rate to Kenya Shillings, the Volumes of
Money Supply and the T-Bill rate (91 day rate) show mixed results. The study reveals that, the exchange rate
and the T-Bill rate have a positive correlation with dividend payout, while volume of money supplied has no
impact on the dividend payout.
Citation
Prime Journal of Business Administration and Management (BAM), Vol. 3(3), pp. 22nd April, 2013Publisher
Prime Journal of Business Administration & Management (BAM) School of Business, University of Nairobi
Subject
Nairobi Securities Exchange (NSE)Dividend Payout
Inflation
Exchange Rate
Money Supply
T-Bill rate
Description
Full Text