| dc.description.abstract | The main aim of this paper is to investigate on the effects of earnings on dividend policy
of firms listed at the Dar Es Salaam Stock Exchange. Dividend policy has been analyzed
for many decades which refers to the issue of how much of the total profit a firm should
pay to its stockholders and how much to retain for investment so that the combined
present and future benefits maximize the wealth of stockholders. This provided
theoretical and empirical information from publications on earnings on dividend policy of
firms. It summarizes the information from other researchers who have carried out their
research in the same area of dividend policy and firm value. The study employed both
quantitative method through analysis of the financial statements using various models
and ratios to provide predominantly quantitative and qualitative data to the study. The
target population as of October 2013 there are seventeen listed companies on Dar Es
Salaam Stock Exchange. The study used secondary data which was obtained from the
financial statements of the Listed Firms on Dar Es Salaam Stock Exchange from 20092013.
The data analysis techniques included descriptive statistics like the mean,
minimum, maximum and standard deviation. In addition, inferential statistics like
correlation analysis and regression analysis. The dividend payout ratio is regressed
against the five explanatory variables: profitability, risk, cash flow, growth and size. The
findings in the study showed that correlation coefficient for all were positive valued
indicating that the variables are positively related. From the regression model, a
correlation coefficient value of 0.407 was established. This portends a very good linear
relationship or dependence of dividend payout on earnings. From the study findings, it is
evident that the most critical factors considered by a firm in coming up with a dividend
policy are the expected cash flows, risk, profitability, growth and size of the firm. a
correlation coefficient value of 0.407 was established. This portends a very good linear
relationship or dependence of dividend payout on earnings. A coefficient of
determination (R-square) value of 0.166 was established. Profitability, risk, cash flow,
growth and size, according to the model summary from the data analysis, profitability,
growth, cash flow, risk and size had a positive impact on the dividend policy. The
research study concluded that earnings to some minimal extent, influenced the dividend
policy of individual firms. Based on the findings of this research study, the following
recommendations are made. Organizations should ensure that they have a good and
robust dividend policy in place. It is also recommended that firms should maintain a clear
and consistent dividend policy for the dividend policy to affect the value of the firm. | en_US |
