A Survey of Factors Affecting Dividend Policy for Firms Listed at the Nairobi Securities Exchange

Abstract

The research set to establish the determinants of dividend policy at the Nairobi Securities Exchange (NSE). The research sought to determine the factors affecting dividend policy for companies quoted at the Nairobi Securities Exchange. The study employed secondary data evaluated using version 20 SPSS software version 20 and findings presented in tables. The results supported the relationship between the subservient variable and the explanatory variables leverage, liquidity, company size, growth and profitability. There was a direct correlation to size, growth and profitability while leverage and liquidity were negatively correlated. At a 5% level of significance, size, leverage, liquidity profitability were found to be statistically significant while company growth was not significant. F statistic was employed to check the general significance of the regression model and found the model statistically significant and suitable for the study. The model was found to be statistically significant with an R2 of 0.7129 inferring the variations in the five explanatory variables attributed to 71.29% of variations in the subservient variable which further proof that the model was statistically significant and suitable for the study. The research concluded that profitability substantial in explaining dividend policy for companies listed at the NSE and recommended that profitability should be maintained at high levels to influence better dividend policy and monitor variables that are negatively correlated to dividend policy among others. Further research should be conducted on other macro-economic factors that influence dividend policy to enable making decisions on an optimum dividend policy.