The Relationship Between Dividend Policy and Stock Return Volatility of Companies Listed at the Nairobi Securities Exchange

Abstract

Dividend decision is complex in nature therefore there been various established to investigate dividend policy decisions. Dividend pay-out issues are very significant in a firm as they signal outsiders concerning the firm’s growth and permanence. Several researches have been done on determinants of dividend policy, and relationship between EPS and DPS. This investigated effects of firm’s dividend policy on the market price. The study discussed theoretical and empirical literature on dividend policy and market price. Descriptive survey was adopted by the study. Population for this study comprised of all the 61 listed companies at the NSE. This study used secondary data. The data was from the NSE. The study developed a multiple regression model. The independent variable was cash dividend policy and stock dividend policy while depended variable was stock price volatility. The research study concluded that dividend policy to some minimal extent influenced the stock return volatility of individual firms. The study recommended that further research was necessary to determine the other specific determinants of stock return volatility for individual firms