| Peer-Reviewed

Determinants of Dividend Policy for Companies Listed at Dar Es Salaam Security Exchange (DSE), a Case of Selected Listed Companies

Received: 10 May 2016     Accepted: 23 June 2016     Published: 6 July 2016
Views:       Downloads:
Abstract

The main objective of the study was to establish the determinants of dividend policies of companies listed at DSE. Specifically, the study aimed to identify factors that influence dividend policy among listed companies and explore the statistical relationship between determinants of dividend policy. Correlation and regression analysis were used to establish the relationship between the dependent and independent variables. The study concludes that the dividend policies of companies listed at the DSE is determined by the amount of profit after tax, liquidity and shareholders’ fund. Among these four determinants, Profitability is the most significant determinant of dividend policy. The study recommends that listed company should adopt dividend policy based on their current financial circumstances, especially, based on their current Profitability position. Also DSE should conduct frequent training to shareholders of various companies listed at DSE so as to help them make sound financial decisions with regard to which companies to buy shares from.

Published in Journal of Finance and Accounting (Volume 4, Issue 4)
DOI 10.11648/j.jfa.20160404.16
Page(s) 202-211
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2016. Published by Science Publishing Group

Keywords

Dividend Policy, Listed Companies, Dares Salaam Stock Exchange, Tanzania

References
[1] Aivazian, V., Booth, L. and Cleary, S. (2003a). “Do emerging markets firms follow different dividend policies from U.S. firms?” Journal of Financial Research, 26: 371 87.
[2] Baker, H. K., E. T. Veit & G. E. Powell. (2001). Factors Influencing Dividend Policy Decisions of Nasdaq Firms. The Financial Review, Eastern Finance Association, (August).
[3] Baker, H. K., Veit, E. T. and Powell, G. E. (2002). “Revisiting the Dividend Puzzle: Do all the pieces now fit?” Review of Financial Economics, 38: 17-35.
[4] Barber, B. M. and Castanias, R. C. (1992). “Why do firms initiate dividends?” Unpublished working papers.
[5] Banerjee, S., V. Gatchev & P. Spindt. (2002). To Pay or Not to Pay? The Dividend Dilemma of the LIQuid Firm. Working paper, Tulane University, New Orleans, Louisiana, November.
[6] Bhattacharya, S. (1979). “Imperfect information, dividend policy and the bird-in-hand fallacy”. Bell Journal of Economics, 10: 259-270.
[7] Black, F. (1976). “The Dividend Puzzle”. The Journal of Portfolio Management, 2: 5-8.
[8] Donaldson, G (1961). “Corporate Debt Capacity”, Harvard: Harvard University Press
[9] DSE (2011), “Blueprint”. The council of the Dar es Salaam Stock Exchange.
[10] Easterbrook, E (1984). “Two agency cost explanations of dividends”. American Economic Review, 74: 650-9.
[11] Forbes, SM and Hatem J, (1998). “NYSE and AMEX listed firms that pay no-dividends: a recent history”. Journal of Financial and Strategic decisions, 11: 47-51.
[12] Friend, I. and Puckett, M. (1964), Dividends and stock prices. American Economic Review, Vol. 54, Issue 5, pp. 656 - 682.
[13] Gordon, M J, (1959). “Dividends, Earnings and Stock Prices”. The Review of Economics and Statistics, 41: 99-105.
[14] Gordon, MJ, (1963). “Optimal Investment and Financing Policy”. Journal of Finance, 18: 264-272.
[15] Jensen, MC (1986). “Agency Costs of free cash flow, corporate finance and takeovers”. The American Economic Review, 76: 323-329.
[16] Julio, B and Ikenberry, DL (2004). “Reappearing dividends“. Journal of Applied Corporate Finance, 16: 89-100.
[17] Kolb, RW and Rodrigez, RJ (1996). “Financial Management”. 2nd Ed. Wiley.
[18] La Porta, R, Lopez-de-Silanes, F, Shleifer, A, and Vishny, RW, (2000). “Agency Problems and Dividends Policies around the world”. The Journal of Finance, 55: 1-33.
[19] Lintner, J (1962). Dividends, Earnings, LE Verage Stock prices and Supply of Capital to Corporations Review of Economics and Statistics, 44: 243-269.
[20] Litzenberger, R and Ramaswamy K (1979). “The effect of taxes and dividend on capital asset prices: Theory and Empirical evidence”. Journal of Financial Economics, 7: 163-195.
[21] Masulis, RW and Korwar, AN, (1986). ”Seasoned Equity offerings”. Journal of Financial Economics, 15: 91-118.
[22] Miller, MH and Modigliani F, (1961). “Dividend Policy, Growth and Valuation of Shares”. Journal of Business, 34: 411-33.
[23] Miller, MH and Scholes, MS (1978). “Dividends and Taxes”. Journal of Financial Economics, 6: 333-364.
[24] Modigliani, F (1982). “Debt, dividend policy, inflation and market valuation”. The Journal of Finance, 37: 255-273.
[25] Myers, SC (1984). “The capital structure puzzle”. Journal of Finance, 39: 575-592.
[26] Naila, P. J. (2007). “Factors Determining Dividend” The case of Listed Companies in Tanzania. Unpublished MBA Research Project, St. Augustine University of Tanzania, 2005.
[27] Njuguna, I. M. (2006). “Detrminants of dividend Payout: The case of Listed Companies in Kenya. Unpublished MBA Research Project, University of Nairobi.
[28] Pandey, IM (2001). “Corporate dividend policy and behaviour: The Malaysian experience”. Indian Institute of Management, WP 2001: 11: 01.
[29] Rozeff, MS (1982). “Growth, beta and agency costs as determinants of dividend payout ratios”. The Journal of Financial Research, 3: 249-59.
[30] Said, M. A (2006). The relationships between Dividends and Investment Decisions of Firms Quoted at the Dar-es-Salaam Stock Exchange. Unpublished MSc Finance Research Project, Mzumbe University.
[31] Shiller R. J (2003). “From Efficient Markets Theory to Behavioral Finance”. Journal of Economic Perspectives, 17: 183-104.
[32] Watson, D and Head, A (2004). “Corporate Finance: Principles and Practice”. Financial Times Prentice Hall, 6th Ed.
Cite This Article
  • APA Style

    Magambo Evelyne F. (2016). Determinants of Dividend Policy for Companies Listed at Dar Es Salaam Security Exchange (DSE), a Case of Selected Listed Companies. Journal of Finance and Accounting, 4(4), 202-211. https://doi.org/10.11648/j.jfa.20160404.16

    Copy | Download

    ACS Style

    Magambo Evelyne F. Determinants of Dividend Policy for Companies Listed at Dar Es Salaam Security Exchange (DSE), a Case of Selected Listed Companies. J. Finance Account. 2016, 4(4), 202-211. doi: 10.11648/j.jfa.20160404.16

    Copy | Download

    AMA Style

    Magambo Evelyne F. Determinants of Dividend Policy for Companies Listed at Dar Es Salaam Security Exchange (DSE), a Case of Selected Listed Companies. J Finance Account. 2016;4(4):202-211. doi: 10.11648/j.jfa.20160404.16

    Copy | Download

  • @article{10.11648/j.jfa.20160404.16,
      author = {Magambo Evelyne F.},
      title = {Determinants of Dividend Policy for Companies Listed at Dar Es Salaam Security Exchange (DSE), a Case of Selected Listed Companies},
      journal = {Journal of Finance and Accounting},
      volume = {4},
      number = {4},
      pages = {202-211},
      doi = {10.11648/j.jfa.20160404.16},
      url = {https://doi.org/10.11648/j.jfa.20160404.16},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160404.16},
      abstract = {The main objective of the study was to establish the determinants of dividend policies of companies listed at DSE. Specifically, the study aimed to identify factors that influence dividend policy among listed companies and explore the statistical relationship between determinants of dividend policy. Correlation and regression analysis were used to establish the relationship between the dependent and independent variables. The study concludes that the dividend policies of companies listed at the DSE is determined by the amount of profit after tax, liquidity and shareholders’ fund. Among these four determinants, Profitability is the most significant determinant of dividend policy. The study recommends that listed company should adopt dividend policy based on their current financial circumstances, especially, based on their current Profitability position. Also DSE should conduct frequent training to shareholders of various companies listed at DSE so as to help them make sound financial decisions with regard to which companies to buy shares from.},
     year = {2016}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Determinants of Dividend Policy for Companies Listed at Dar Es Salaam Security Exchange (DSE), a Case of Selected Listed Companies
    AU  - Magambo Evelyne F.
    Y1  - 2016/07/06
    PY  - 2016
    N1  - https://doi.org/10.11648/j.jfa.20160404.16
    DO  - 10.11648/j.jfa.20160404.16
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 202
    EP  - 211
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20160404.16
    AB  - The main objective of the study was to establish the determinants of dividend policies of companies listed at DSE. Specifically, the study aimed to identify factors that influence dividend policy among listed companies and explore the statistical relationship between determinants of dividend policy. Correlation and regression analysis were used to establish the relationship between the dependent and independent variables. The study concludes that the dividend policies of companies listed at the DSE is determined by the amount of profit after tax, liquidity and shareholders’ fund. Among these four determinants, Profitability is the most significant determinant of dividend policy. The study recommends that listed company should adopt dividend policy based on their current financial circumstances, especially, based on their current Profitability position. Also DSE should conduct frequent training to shareholders of various companies listed at DSE so as to help them make sound financial decisions with regard to which companies to buy shares from.
    VL  - 4
    IS  - 4
    ER  - 

    Copy | Download

Author Information
  • Accountancy Department, College of Business Education, Mwanza, Tanzania

  • Sections