Financial Performance and Dividend Policy

Citation:
Kimunduu GM, MWANGI MIRIE, Kaijage E, Ochieng DE. "Financial Performance and Dividend Policy." European Scientific Journal. 2017;13(28):138-154.

Abstract:

Past studies on the relationship between dividend policy and firm
performance continue being an unresolved predicament with few studies
interrogating the causality relationship between financial performance and
dividend policy. The purpose of this study was to establish the nature of
relationship between financial performance and dividend policy of firms
listed at the Nairobi securities exchange. The study applied positivism
research philosophy and descriptive causal research design. The study was
anchored on hypothetical view that the relationship between financial
performance and dividend policy of firms listed at the Nairobi securities
exchange is not significant which was tested against a sample size of 31
firms listed at the Nairobi securities exchange selected using purposive
sampling technique. The research findings were as follows: There was a
statistically significant direct association between return on equity and
dividend policy. This implies that as firm profitability improve; a
corresponding proportionate change in dividend payout ratio is initiated by
management. In addition, it was established that there was a statistically
significant positive linkage between operating cash flows and dividend
policy which denotes that as cash flow levels from operating activities
change, dividend payout ratio will change in the same direction leading

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