Relationship Between Dividend Policies And Share Prices Of Non Financial Firms Listed At The Nairobi Securities Exchange
Musyimi, Christine M
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The aim of this study is to examine the relationship between dividend policies and share prices of non financial firms listed at Nairobi Securities Exchange (NSE). The general objective of the study was to examine the relationship between dividend policies (dividend payout ratio, dividend growth rate and control variable i.e. Earnings per share) and the share price of non financial firms listed at NSE. The dataset consisted volume weighted average price as dependent variables and dividend payout ratio, dividend growth rate and earnings per share as independent variables. A non probability sampling was used. Purposive sampling was used to select the 20 desired non financial firms listed at Nairobi Securities Exchange. The study used secondary panel data contained in the annual reports and financial statements of listed non financial firms. The data was extracted from the Nairobi Securities Exchange websites for period 2010 to 2015. The study employed descriptive design. The study applied panel data models (Fixed effects). Multiple linear regression analysis was used to establish the relationship. The findings showed that there was statistically insignificant positive relationship between dividend payout ratio and share price of non financial firms listed at NSE. Dividend growth rate had positive significant relationship with share price. Earnings per share had negative and significant relationship with the share price. The study recommended that management of listed firms should conduct a research on different dividend policies to identify the ones that would maximize the value of a firm.