RELATIONSHIP BETWEEN SALES GROWTH AND DIVIDEND PAYOUT A STUDY OF LISTED COMPANIES IN KENYA
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Jan 27, 2022
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Abstract
This study analyzed the relationship that exists between dividend payout and sales growth. The study adopted a descriptive research design. Thirty financial statements of listed companies was analyzed. The research also advanced the work of previous scholars and academicians. Based on this research the results showed that there was a negative relationship between dividend payout and sales growth. This study recommended that firm managers should plan on the proportion of profits that should be retained versus the portion that will be distributed as dividends to stockholders. Managers are also rated on financial performance hence the findings of this study would be of great benefit to them and would also act as a guide to setting reliable corporate dividend policies.
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References
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Arnott, R. D., &Asness, C. S. (2003). Surprise! Higher dividends= higher earnings growth. Financial Analysts Journal, 70-87.
Bashir, Z, Abbas, A, Manzoor, S &Akram, M.N. (2013). Empirical investigation of factors affecting firm’s performance: a study based on food sector of Pakistan. International SAMANM Journal of Finance and Accounting,1(2).
Bitok, K., Tenai, J., Cheruiyot, T., Maru, L. &Kipsat, M. (2010). The level of corporate dividend payout to stockholders: Does optimal dividend policy exist for firms quoted at the Nairobi Securities Exchange?International Business & Economic Research Journal, 9(3).
Black, F. (1976). The dividend Puzzle. Journal of Portfolio Management, 5(8)
Brealy, R.A, Myers, S.C & Marcus, A, J. (2007). Fundamentals of Corporate Finance. Boston: McGraw Hill Irwin
Dilawer, T. (2012). Earning Management and Dividend Policy: Evidence from Pakistani Textile Industry. International Journal of Academic Research in Business & Social Sciences, 2(10).
Farsio, F, Geary, A & Moser, J. (2004). The relationship between dividends and earnings. Journal for economic Educators, 4(4), 1-5
Grossman, S. J., & Hart, O. D. (1982). Corporate financial structure and managerial incentives. In The economics of information and uncertainty (pp. 107-140). University of Chicago Press.
Hanif, H. (2014). The Dynamic Relationship among Dividend, Earning and Investment: Empirical Analysis of Karachi Stock Exchange. International Journal of Management and Business Research, 4(1), 55-63.
Howatt, B., Zuber, R. A., Gandar, J. M., & Lamb, R. P. (2009). Dividends, earnings volatility and information. Applied Financial Economics, 19(7), 551-562.
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Krishnan & Moyer (1997). Performance, Capital Structure and Home Country: An analysis of Asian Countries. Global Finance Journal, 8(1), 129-143.
Mbuki, C. (2010). Factors that determine dividend payout ratio among Sacco’s in Kenya. Unpublished MBA project, University of Nairobi.
Memon, F., Bhutto, N.& Abbas, G. (2012). Capital Structure and firm’s performance: A case of sector of Pakistan. Asian Journal of Business and Management Sciences, 1, (9), 9-15.
Nissim, D., &Ziv, A. (2001). Dividend changes and future profitability. The Journal of Finance, 56(6), 2111-2133.
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Nosa&Ose, (2010). Capital Structure and Corporate Performance in Nigeria: An empirical investigation. Journal of Management Sciences, 1(1), 43-52.
Omran, M., &Pointon, J. (2004). Dividend policy, trading characteristics and share prices: empirical evidence from Egyptian firms. International Journal of Theoretical and Applied Finance, 7(02), 121-133.
OnaolapoandKajola (2010). Capital structure and Firm’s Performance: Evidence from Nigeria. European Journal of Economics, Finance and Administration Sciences, 25, 70-82.
Welch, I. (2009). Corporate Finance an Introduction. New York: Pearson Education International
Williams, J. (1987). Perquisites, risk, and capital structure. Journal of Finance, 42, 29–49.
Parsian, H., Koloukhi, A. S. &Abdolnejad, S. (2013). The relationship between dividend payouts ratio and future earnings growth, a case of listed company in Iran market. Interdisciplinary Journal of Contemporary Research in Business, 5 (4).
Ross, A. S, Westerfield, R.W & Jaffe, J. (1999) Corporate Finance. Boston: Irwin McGraw-Hill
Yegon, C., Cheruiyot, J., Sang, J., Cheruiyot, P.K., Kirui, J. & Rotich, J. (2014). Effects of dividend policy on Firms’s Financial Performance: Econometric Analysis of listed Manufacturing firms in Kenya. Research Journal of Finance & Accounting, 5(12).
Zeitun, R., and Tian, G.G., (2007). Capital Structure and Corporate performance: Evidence from Jordan. Australasian Accounting, Business and Finance Journal, 1(4).
Amidu, M., &Abor, J. (2006).Determinants of dividend payout ratios in Ghana. Journal of Risk Finance, The, 7(2), 136-145.
Arnott, R. D., &Asness, C. S. (2003). Surprise! Higher dividends= higher earnings growth. Financial Analysts Journal, 70-87.
Bashir, Z, Abbas, A, Manzoor, S &Akram, M.N. (2013). Empirical investigation of factors affecting firm’s performance: a study based on food sector of Pakistan. International SAMANM Journal of Finance and Accounting,1(2).
Bitok, K., Tenai, J., Cheruiyot, T., Maru, L. &Kipsat, M. (2010). The level of corporate dividend payout to stockholders: Does optimal dividend policy exist for firms quoted at the Nairobi Securities Exchange?International Business & Economic Research Journal, 9(3).
Black, F. (1976). The dividend Puzzle. Journal of Portfolio Management, 5(8)
Brealy, R.A, Myers, S.C & Marcus, A, J. (2007). Fundamentals of Corporate Finance. Boston: McGraw Hill Irwin
Dilawer, T. (2012). Earning Management and Dividend Policy: Evidence from Pakistani Textile Industry. International Journal of Academic Research in Business & Social Sciences, 2(10).
Farsio, F, Geary, A & Moser, J. (2004). The relationship between dividends and earnings. Journal for economic Educators, 4(4), 1-5
Grossman, S. J., & Hart, O. D. (1982). Corporate financial structure and managerial incentives. In The economics of information and uncertainty (pp. 107-140). University of Chicago Press.
Hanif, H. (2014). The Dynamic Relationship among Dividend, Earning and Investment: Empirical Analysis of Karachi Stock Exchange. International Journal of Management and Business Research, 4(1), 55-63.
Howatt, B., Zuber, R. A., Gandar, J. M., & Lamb, R. P. (2009). Dividends, earnings volatility and information. Applied Financial Economics, 19(7), 551-562.
Jensen, M. &Meckling, W. (1976).Theory of the Firm: Managerial Behavior, Agency Costs, and Capital Structure. Journal of Financial Economics 76, 323-339.
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American economic review, 323-329.
Kibet, P. K. (2012). The effect of liquidity on dividend payout by companies listed at the Nairobi Securities Exchange. Unpublished MBA project, University of Nairobi.
Krishnan & Moyer (1997). Performance, Capital Structure and Home Country: An analysis of Asian Countries. Global Finance Journal, 8(1), 129-143.
Mbuki, C. (2010). Factors that determine dividend payout ratio among Sacco’s in Kenya. Unpublished MBA project, University of Nairobi.
Memon, F., Bhutto, N.& Abbas, G. (2012). Capital Structure and firm’s performance: A case of sector of Pakistan. Asian Journal of Business and Management Sciences, 1, (9), 9-15.
Nissim, D., &Ziv, A. (2001). Dividend changes and future profitability. The Journal of Finance, 56(6), 2111-2133.
Njuguna, I.M (2006). Determinants of dividend payout: Case of listed companies in Kenya. Unpublished MBA project, University of Nairobi.
Nosa&Ose, (2010). Capital Structure and Corporate Performance in Nigeria: An empirical investigation. Journal of Management Sciences, 1(1), 43-52.
Omran, M., &Pointon, J. (2004). Dividend policy, trading characteristics and share prices: empirical evidence from Egyptian firms. International Journal of Theoretical and Applied Finance, 7(02), 121-133.
OnaolapoandKajola (2010). Capital structure and Firm’s Performance: Evidence from Nigeria. European Journal of Economics, Finance and Administration Sciences, 25, 70-82.
Welch, I. (2009). Corporate Finance an Introduction. New York: Pearson Education International
Williams, J. (1987). Perquisites, risk, and capital structure. Journal of Finance, 42, 29–49.
Parsian, H., Koloukhi, A. S. &Abdolnejad, S. (2013). The relationship between dividend payouts ratio and future earnings growth, a case of listed company in Iran market. Interdisciplinary Journal of Contemporary Research in Business, 5 (4).
Ross, A. S, Westerfield, R.W & Jaffe, J. (1999) Corporate Finance. Boston: Irwin McGraw-Hill
Yegon, C., Cheruiyot, J., Sang, J., Cheruiyot, P.K., Kirui, J. & Rotich, J. (2014). Effects of dividend policy on Firms’s Financial Performance: Econometric Analysis of listed Manufacturing firms in Kenya. Research Journal of Finance & Accounting, 5(12).
Zeitun, R., and Tian, G.G., (2007). Capital Structure and Corporate performance: Evidence from Jordan. Australasian Accounting, Business and Finance Journal, 1(4).