Do dividends provide information about future earning of listed companies at the Nairobi Stock Exchange?

Abstract

This paper investigated whether dividends are informative about a firm's future earnings per share. The study reports the results ofa ten-year (1998 to 2008) empirical analysis of the relatio nship between dividend changes and future earnings per sha re us ing regress io n analysis on firms listed at the Nairobi Stock Exchange. The data reveal a weak relationship between the dividend changes and future earnings per share lagged by one year. Overall the result found is that dividend changes provide around only 0.3 percent information about the level and changes in future earnings per share and leaves the 99.7 percent unexplained. This is an indication that there are other critical variables that determine the changes in the firms earning per share.