Abstract:
Dividend policy is the major decision faced by corporate financial managers besides financing, investment and working capital management. Dividend policy analysis affects all the facets of the company in that it determines what funds are available for every operation and how the funds will be utilized to increase shareholders wealth. It is therefore considered to be one of the most important financial decisions that corporate managers encounter. This study sought to establish the influence of selected firm characteristics on dividend policy for manufacturing companies at the Nairobi Securities Exchange (NSE).The objective of the study was to establish how and the extent to which liquidity, leverage, and asset tangibility influence dividend policy for manufacturing firms at the NSE. The study used descriptive research design and relied on secondary data from the Nairobi Securities Exchange website and other publications. The data comprised of annual published financial statements of the manufacturing firms at the Nairobi Securities Exchange for the years 2008 to 2017 to give current inferences. The study used panel regressions techniques to analyze the data of all the 8 manufacturing companies at Nairobi Securities Exchange (NSE) for the period 2008-2017. The overall model was found to be significant (P-value of 0.000) in ascertaining the influence of the factors on dividend policy of the listed manufacturing firms in Kenya. The study found an R2 of 72.16 % which meant that 72.16 % of the variations in dividend policy were explained by the changes in liquidity, leverage and asset tangibility. Both liquidity and asset tangibility had a positive and significant effect and leverage had a negative and significant effect on dividend policy of the listed manufacturing firms. The study recommended that firms should foster their liquidity management practices, enhance their asset tangibility and manage their debts prudently as the returns to shareholders are significantly affected by these firm specific characteristics.
