Shareholders' pressure on the firms decision to pay dividends at Nairobi Stock Exchange

Abstract

This study was conducted to assess the possible impact of shareholders pressure on the decision of management to pay dividends for companies quoted at the Nairobi stock Exchange.Data were collected in form of ordinary share prices, dividends payments, dividend per share for the years 1996 to 2003.AII the 48 companies listed at Nairobi stock Exchange were examined. Price to book ratio of dividend paying firms to non-dividend paying firms were empirically tested. Further analysis confirmed that speculators identify non-payers that are likely to pay dividends, and by paying a high price, put pressure on the shares of such firms by way of additional demand and consequently on corporate managers to pay dividends.