Abstract: As a company earns profits it can it can pay it back to its investors as dividends or it can retain it within the business for reinvesting. It may however decide to apportion the surplus to both. In taking any of the above courses of action, managers should concentrate on how to maximize the wealth of shareholders for whom the firm is being managed. Decision making about dividend policy is one of the most important decision that companies have to make. Dividend policy is dependent on lots of factors such as type of industry, trends of profits, taxation policy and liquidity. The objective of the study was to determine the effect of dividend policy on the financial performance of non financial firms listed at the NSE. The study period was a five year period i.e. 2010-2014. This study involved the use of a descriptive research design using a sample of 46 firms listed at the NSE. This study found that Payout Ratio had no significant positive effect on ROE and not significant negative effect on ROA. Leverage had a significant negatively effect ROE and no significant negative effect on ROA. Liquidity had no significant negative effect on ROE and a significant positive effect on ROA. The firm size and leverage had a significant negative effect on ROE and no significant negative effect on ROA the other variables (dividend payout ratio and liquidity) had the same results as without the firm size. The study concluded that the major factors that affect financial performance of listed firms are; Payout Ratio, liquidity and leverage.
Keywords: The author gives 5 – Dividend Policy, Dividend Payout, Leverage, Liquidity, financial performance.
Title: EFFECT OF DIVIDEND POLICY ON FINANCIAL PERFORMANCE OF NON FINANCIAL FIRMS LISTED AT NAIROBI SECURITY EXCHANGE
Author: Sheila Mukanzi, Edah Kavwanyiri, Dr. Julius Bichanga Miroga
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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