An investigation into the existence and characteristics of the dividend yield clientele phenomenon among the equity stock investors in Kenya

Abstract

The study intended to investigate whether the banding of investors around equity securities is a discernible phenomenon in the Kenyan investment situation. Companies were divided into four groups defined by their respective dividend yields to reflect the marriage between their dividend policies and the market reactions there to. Data was collected on the four groups of investors in terms of their demographic characteristics The findings of the study revealed that there are no significant differences between the investors in the four groups as regards the constituent investor demographic characteristics except in terms of age, occupation and family size_Generally, the study showed a slight indication of the non tax determined clientele existence in Kenya, although the tax variable has been regarded by the financial theory to be an important consideration in equity stock selection. This reflects the less sophisticatedness of the Kenyan investor, as a consequence of which a clearly determinable bias can not be defined. The message for the Kenyan manager is that Dividend policy variations still cause ambiguous responses from the Kenyan investors and cannot be strictly relied on in valuation considerations