Effects of Ownership Structure on Firm's Dividend Policy: Evidence From Nairobi Securities Exchange
Abstract
This study sought to investigate the effects of ownership structure (local and foreign) on
the dividend policies of firm's listed at the Nairobi Securities Exchange. The study is
causal in nature. The population of this study comprised of all the listed firms at the NSE
from January 2008 to December 2012. A census of the population was conducted.
Analysis was conducted through the use of a regression analysis. The findings generated
two key results. First, the results indicated that ownership structure only influenced a
paltry 0.8% of variations in payout as indicated by the adjusted R square. This meant that
the model used explained very little of the firms' variability in dividend payout. The
study therefore concluded that the firms' ownership structure does not significantly
influence dividend policy. Secondly, Coefficient of changes in foreign ownership
structure at 5% level of significance yielded a p-value which was not significant and was
negative. Coefficients of changes in local ownership likewise yielded a p-value which
was not significant either, but on the contrary had a positive sign. The study thus
concluded that changes in ownership structure do not influence changes in dividend
policy for companies listed in the Nairobi Securities Exchange. The study also concluded
that though to an inconsequential extent, changes in local ownership were positively
associated to changes in dividend policy while changes in foreign ownership were
negatively associated to changes in dividend policy. The study recommends that further
research be done to establish: the effect of other forms of ownership structures on firms'
dividend policy; and why local ownership exhibited a positive relationship with payout
while foreign ownership exhibited negative association with payout.
Citation
Obed Obiero Bogonko (2013). Effects Of Ownership Structure On Firm's Dividend Policy: Evidence From Nairobi Securities Exchange. Master Of Business AdministrationPublisher
University of Nairobi