The effect of dividend policy on the value of firms listed at the Nairobi Securities Exchange
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Date
2016-11Author
Yuko, Stephen O
Type
ThesisLanguage
enMetadata
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This study sought to examine effect of dividend policy on value of firms listed at NSE.
The study reviewed the Modigliani and Miller dividend irrelevance model, the bird in
hand theory, the signaling theory and the agency theory to explain the concepts of
dividend policy and firm value. To answer the research question the study used a
quantitative research design. Study population comprised of 65 firms listed at NSE as at
31/12/2015. This study used secondary data extracted from the listed firms financial
statements for a period of 5 years from the 2011 – 2015. Data analysis was carried out
using correlation and regression analysis using the Statistical Package for Social Sciences
(SPSS) version 21. The study findings established that that dividend payout and firm size
significantly and positively influences firm’s value. The study also found that the timing
of payment of dividends and the mode of dividend payment positively influences value of
the firm while debt ratio negatively influences the value of the firm an indication that
increase in debt levels reduces the value of the firm. The study concluded that dividend
policy is relevant and affects firm’s value positively such that an increase in dividends
increases firm’s value and vice versa. The study recommended that manager of listed
firms should develop effective dividend payout policies to ensure that their firms pay out
dividends to enhance the value of their companies.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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