INFLUENCE OF PROFITABILITY ON DIVIDEND SMOOTHING AMONG LISTED FIRMS AT NAIROBI SECURITIES EXCHANGE, KENYA
Abstract
The objective of this study was to establish the influence of profitability on dividend smoothing among listed firms at Nairobi Securities Exchange, Kenya. The study was guided by irrelevance theory. The study adopted descriptive survey design. The study targeted all firms listed on Nairobi Securities Exchange as of December, 2018. The study utilized purposive sampling technique as it only dealt with firms that had been paying dividends between 2014 and 2018. The study utilized secondary data that was collected from NSE handbook between 2008 and 2018. The study utilized descriptive statistics and inferential statistics. Descriptive statistics entailed mean, standard deviation, maximum, minimum and standard error while inferential statistics comprised of correlation and linear regression analyses. The data was subjected to diagnostic test such as linearity, normality, multi-collinearity, homoscedasticity and auto-correlation to test assumptions of linear regression. The results established that there is significant positive relationship between profitability and dividend smoothing. The findings of this study would be significant to various groups such as capital market authority, academicians and management of listed firms. The study concluded that listed firms that were more profitable were more likely to smooth their dividend. It was concluded that Profitability is vital to the firm’s manager as well as the owners and other stakeholders. The study recommended that there is need for firms to increase their profitability so as to achieve dividend smoothing over time. This could be achieved by increasing the rate of return of assets. Management was recommended to utilize their assets in a profitable manner so as to achieve dividend smoothing.
Key Words: Profitability, Dividend Smoothing, Listed Firms Performance
CITATION: Nyongesa, G. K., & Maniagi, M. (2020). Influence of profitability on dividend smoothing among listed firms at Nairobi Securities Exchange, Kenya. The Strategic Journal of Business & Change Management, 7(3), 1025 – 1038.
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DOI: http://dx.doi.org/10.61426/sjbcm.v7i3.1724
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