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The Impact of Corporate Governance on Dividend Payout of Manufacturing Firms Listed at the Nairobi Securities Exchange

Received: 31 May 2016     Accepted: 12 June 2016     Published: 29 August 2016
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Abstract

This study sought to examine the impact of corporate governance on dividend payout of manufacturing firms listed at the NSE. The objectives of the study were; to determine the impact of board size, board composition, CEO tenure and managerial equity holding on dividend payout of manufacturing firms listed at NSE and finally, to establish the impact of corporate governance on dividend payout of manufacturing firms listed at NSE. The study employed a correlational research design and the population of the study comprised all manufacturing firms which were consistently listed at the Nairobi Securities Exchange from 2008-2014. Correlation and regression analysis were used to test the impact of the independent variables relating to corporate governance practices on the dependent variable (Dividend Payout). Independent one-way ANOVA test and independent t-test (one tailed) were used to determine the level of significance. The study found that board size, board composition, CEO tenure and management equity holding have a weak negative relationship with dividend payout. Further, the study found that board size has a statistical significant impact on dividend payout, while board composition, CEO tenure and managerial equity holding were found to have no statistical significant impact on the dividend payout. The empirical results from the multiple regression analysis indicated that there is a strong positive relationship between corporate governance and dividend payout. However, there was no statistical significant relationship between the two variables. Therefore, this study concludes that corporate governance has no impact on dividend payout of manufacturing firms listed at NSE.

Published in Journal of Finance and Accounting (Volume 4, Issue 5)
DOI 10.11648/j.jfa.20160405.12
Page(s) 254-261
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

Corporate Governance, Dividend Payout, Manufacturing Firms, Nairobi Securities Exchange

References
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Cite This Article
  • APA Style

    Caroline Ikunda, Monica Muiru, Simon M Kamau. (2016). The Impact of Corporate Governance on Dividend Payout of Manufacturing Firms Listed at the Nairobi Securities Exchange. Journal of Finance and Accounting, 4(5), 254-261. https://doi.org/10.11648/j.jfa.20160405.12

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    ACS Style

    Caroline Ikunda; Monica Muiru; Simon M Kamau. The Impact of Corporate Governance on Dividend Payout of Manufacturing Firms Listed at the Nairobi Securities Exchange. J. Finance Account. 2016, 4(5), 254-261. doi: 10.11648/j.jfa.20160405.12

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    AMA Style

    Caroline Ikunda, Monica Muiru, Simon M Kamau. The Impact of Corporate Governance on Dividend Payout of Manufacturing Firms Listed at the Nairobi Securities Exchange. J Finance Account. 2016;4(5):254-261. doi: 10.11648/j.jfa.20160405.12

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  • @article{10.11648/j.jfa.20160405.12,
      author = {Caroline Ikunda and Monica Muiru and Simon M Kamau},
      title = {The Impact of Corporate Governance on Dividend Payout of Manufacturing Firms Listed at the Nairobi Securities Exchange},
      journal = {Journal of Finance and Accounting},
      volume = {4},
      number = {5},
      pages = {254-261},
      doi = {10.11648/j.jfa.20160405.12},
      url = {https://doi.org/10.11648/j.jfa.20160405.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20160405.12},
      abstract = {This study sought to examine the impact of corporate governance on dividend payout of manufacturing firms listed at the NSE. The objectives of the study were; to determine the impact of board size, board composition, CEO tenure and managerial equity holding on dividend payout of manufacturing firms listed at NSE and finally, to establish the impact of corporate governance on dividend payout of manufacturing firms listed at NSE. The study employed a correlational research design and the population of the study comprised all manufacturing firms which were consistently listed at the Nairobi Securities Exchange from 2008-2014. Correlation and regression analysis were used to test the impact of the independent variables relating to corporate governance practices on the dependent variable (Dividend Payout). Independent one-way ANOVA test and independent t-test (one tailed) were used to determine the level of significance. The study found that board size, board composition, CEO tenure and management equity holding have a weak negative relationship with dividend payout. Further, the study found that board size has a statistical significant impact on dividend payout, while board composition, CEO tenure and managerial equity holding were found to have no statistical significant impact on the dividend payout. The empirical results from the multiple regression analysis indicated that there is a strong positive relationship between corporate governance and dividend payout. However, there was no statistical significant relationship between the two variables. Therefore, this study concludes that corporate governance has no impact on dividend payout of manufacturing firms listed at NSE.},
     year = {2016}
    }
    

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    AU  - Caroline Ikunda
    AU  - Monica Muiru
    AU  - Simon M Kamau
    Y1  - 2016/08/29
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    N1  - https://doi.org/10.11648/j.jfa.20160405.12
    DO  - 10.11648/j.jfa.20160405.12
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
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    EP  - 261
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20160405.12
    AB  - This study sought to examine the impact of corporate governance on dividend payout of manufacturing firms listed at the NSE. The objectives of the study were; to determine the impact of board size, board composition, CEO tenure and managerial equity holding on dividend payout of manufacturing firms listed at NSE and finally, to establish the impact of corporate governance on dividend payout of manufacturing firms listed at NSE. The study employed a correlational research design and the population of the study comprised all manufacturing firms which were consistently listed at the Nairobi Securities Exchange from 2008-2014. Correlation and regression analysis were used to test the impact of the independent variables relating to corporate governance practices on the dependent variable (Dividend Payout). Independent one-way ANOVA test and independent t-test (one tailed) were used to determine the level of significance. The study found that board size, board composition, CEO tenure and management equity holding have a weak negative relationship with dividend payout. Further, the study found that board size has a statistical significant impact on dividend payout, while board composition, CEO tenure and managerial equity holding were found to have no statistical significant impact on the dividend payout. The empirical results from the multiple regression analysis indicated that there is a strong positive relationship between corporate governance and dividend payout. However, there was no statistical significant relationship between the two variables. Therefore, this study concludes that corporate governance has no impact on dividend payout of manufacturing firms listed at NSE.
    VL  - 4
    IS  - 5
    ER  - 

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Author Information
  • Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya

  • Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya

  • Faculty of Commerce, Department of Accounting, Finance & Management Science, Egerton University, Nakuru, Kenya

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