| dc.description.abstract | Dividend policy occupies a major role in the financial management of an organization
and serves as a mechanism for control of a managerial opportunism.Several theories have
been documented on the relevance and irrelevance of dividend policy on firm
performance. Many authors continue to come up with different findings from their
studies on the relevance of dividend policy. This research sought to determine the effect
of dividends on financial performance of financially constrained firms listed at Nairobi
securities exchange. This study carried out a census of the 41 non-financial companies
that were listed for the entire period of the study (2009-2013). Data for the study
wereextracted from annual reports and accounts of 41non-financial companies listed at
Nairobi Securities Exchange. Performance of the companies was established by
conducting the Z-score analysis on each of the companies. The Z-score analysis
identified 9 companies has having been financially constrained at one point or another
during the period of the study. Regression analysis was carried out to establish the effect
of dividend payout, total assets and leverage on firm performance. The findings indicated
that dividend payout, total assets and leverage were major factors affecting firm
performance. This therefore showed that dividend policy was relevant. It can be
concluded, based on the findings of this research that dividend policy is relevant and that
managers should devote adequate time in designing a dividend policy that will enhance
firm performance and therefore shareholder value.It is recommended that Organizations
should ensure that they have a good and robust dividend policy in place because it will
enhance their performance and attract investments to the organizations | en_US |
