Intervening Effect of Cash Holdings in the Relationship Between Financial Performance and Dividend Policy

Citation:
Kimunduu GM, MWANGI MIRIE, Kaijage E, Ochieng DE. "Intervening Effect of Cash Holdings in the Relationship Between Financial Performance and Dividend Policy." European Scientific Journal. 2017;13(28):264-281.

Abstract:

Many studies on relationship between financial performance and
dividend policy have resulted to controversial outcome with few studies
questioning the intervening effect of cash holdings. The purpose of this study
was to evaluate the effect of cash holdings on the relationship between
financial performance and dividend policy. 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 intervened by cash holdings 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 significant direct association between operating cash flows and
dividend policy which was intervened by cash holdings. In general it was
concluded that the link between financial performance and dividend policy
of firms listed at the Nairobi securities exchange was significant. The study
outcome augment existing knowledge on financial performance and dividend
policy for it is evident that firms with ability to generate income directly
influence dividend payout ratio and therefore, top management should
enhance financial performance an

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