Abstract: Dividend policy continues to generate endless debate although several researchers have conducted both theoretical and empirical research on the topic These include the association of dividend policy and stock price risk. Different researchers have failed to reach a consensus after investigating how dividend policy and volatility of share price associate over time. This study therefore, sought to establish how dividend policy impact on stock price volatility of firms listed on the Nairobi Security Exchange market in Kenya. The main objective of this study was to find out the impact of dividend policy on stock prices volatility for firms listed on the Nairobi Security Exchange market in Kenya. The specific objective was to establish the impact of payout ratio on stock price volatility for firms listed on Nairobi securities exchange market in Kenya.
Materials and Methods: Descriptive research design was used in this study. Secondary pooled data was obtained from audited financial records of firms listed at the Nairobi Securities Exchange Market from 2012 to 2017, (6years period) was used.The study was based on the sixty four listed companies during the period and purposive sampling was used to establish companies with complete data over the period of study. Panel data was analyzed using descriptive and inferential statistics. Inferential statistic involved testing hypothesis at 0.05 and 0.01 significance levels and it also included, simple regression analysis, multiple regression analysis and correlation analysis. Decsriptive statistics involved, minimax, mean and standard deviation. Data was presented in form of tables and charts.
Results: The findings of the study revealed that there was a statistically significant positive relationship between payout ratio and stock price volatility of firms listed on Nairobi securities exchange market in Kenya P=.000.
Conclusion: The study concluded that dividend policy influences the stock prices volatility for firms listed on the Nairobi Securities Exchange Market in Kenya. The study recommends that firms should strike a balance between the amount of money retained and money paid to shareholders as dividends. This will go a long way to strengthening their dividend policy and the level of volatility registered in their share price.
Keywords: Dividend policy, Dividend payout ratio, listed companies, Stock price volatility.
Title: IMPACT OF DIVIDEND POLICY ON STOCK PRICES VOLATILITY FOR FIRMS LISTED ON THE NAIROBI SECURITY EXCHANGE MARKET IN KENYA
Author: Eunice Khanyisi Lisutsa, Dr. Benedict Ondieki Alala (PHD), Dr. Maniagi Musiega (PHD)
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Research Publish Journals
