Year: 2015
Type: article
Abstract: The dividend decision is one of the fundamental financial decisions in the management of a firm. To most investors, the value of an investment is assessed primarily on the basis of returns received usually in form of dividend and interest. Thus, a firm’s dividend decision carries significant information value to investors. On the other hand, the expanding investment market in Kenya has placed an increased challenge on managers to accumulate sufficient funds for growth. This situation has further limited managers ’ discretion on the dividend payment. A balance between the various competing interests is critical for sustainable growth of a firm. Considering that quoted companies in Kenya enjoy public trust and investor confidence due to the stringent governance and reporting requirements, which in most cases are reflected in the positive earnings and growth that they generate for their shareholders, it would be useful to study the key factors that drive their dividend policies. These considerations may be replicated in other firms and sectors so that they too may achieve sustainable growth while addressing the needs of their diversified investors. This study therefore seeks to examine the factors considered by management of quoted companies in Kenya in determining the dividend payout ratios. The study goes further to assess whether the ranking of these factors is influenced by the nature of industry, size and age of a company.
Authors: Isaac Muchiri Njuguna, Ambrose Jagongo
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1924730537