Dividend Decisions, Economic Growth and Firm’s Value of Firms Listed at Nairobi Securities Exchange Kenya
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Date
2020
Authors
Gitagia, Francis K.
Wamugo, Lucy
Omagwa, Job
Journal Title
Journal ISSN
Volume Title
Publisher
International Knowledge Sharing Platform
Abstract
The declining and highly volatile firm value observed in the NSE over the last decade has raised concern among
scholars and financial practitioners. A declining and turbulent firm value implies lost and unstable shareholders
wealth which in turn increases risk to the stock holders. It is therefore important to ensure that the firm value is
enhanced to ensure growth and stable wealth of the shareholders. The study was carried out to determine the effect
of dividend decisions, economic growth and firms’ value of selected firms listed at Nairobi securities exchange
Kenya. The target population was the 46 non-financial companies listed in the NSE. A census of all non-financial
firms listed in the Nairobi Securities Exchange was done. The study utilized secondary data from financial reports
as published in the NSE handbook and Kenya National Bureau of Statistics for the period between 2008 and 2016.
Panel regressions analysis and Pearson’s product moment correlation analysis were used for inferential analysis
while means and standard deviations were used for purposes of descriptive analysis. Feasible Generalized Least
Square (FGLS) regression results indicated that dividend decisions (p=0.012, <0.05) had a statistically significant
positive effect on firm value. Whisman test of moderation further indicated that GDP had significant positive
moderation effect on the relationship between each of the dividend decisions and the firm value. The study
concludes that; dividend yield has a very strong positive relationship with firm value. That is, increases/decreases
in dividend yield will be accompanied by increases/decreases in firm value. The study therefore recommends that
corporate managers increase the dividend payout in times of profitability
Description
A research article published in Research Journal of Finance and Accounting
Keywords
Dividend Decisions, Economic, Growth, Firm Value
Citation
Research Journal of Finance and Accounting. Vol.11, No.18, 2020