DIVIDEND MANAGEMENT AND THE PERFORMANCE OF MANUFACTURING FIRMS IN KENYA
Abstract
Over the last two and a half decades, the overall trend in the Kenyan manufacturing sector has been a decline in sales, revenues, and margins. However, the issue arising here is that there is no clarification on the effective dividend management strategy that should be applied in the manufacturing sector, which is what the current study seeks to address. Return on Equity (ROE) in the manufacturing sector in Kenya has been variable, ranging in various studies, yet overall, the trend, from 2017-2021, suggests a decline in the overall ROE for the Kenyan listed firms, peaking at an ROE of 13.6 percent in 2018, followed by an abrupt decline to an ROE of 2 percent in 2021. Obviously, the findings from this present study will contribute to the existing literature in the field, as the study is guided by the Bird-in-Hand Theory. Being an applied scientific discipline, the population targeted for this particular study were the nine manufacturing firms that are presently listed on the Nairobi Stock Exchange. Being an empirical study, the present study utilized the correlational study design. For the purposes of the present study, the researcher conducted a census to examine the performance of the nine manufacturing firms. Data analysis techniques used STATA. For hypothesis testing, the independent variable is related to the dependent variable, viz., performance. For the purposes of hypothesis description, the researcher has utilized the means, standard deviations, and standard errors. For the purposes of hypothesis interpretation, the researcher has worked within the realm of inferential statistics. For the purposes of the current hypothesis, the results are displayed in tables, charts, and graphs. It is evident from the results that the overall R-squared value in the relationship between dividend management, both in ROE and EPS, is 0.4817, significant overall at the level of p = 0.000, while the overall R-squared in the relationship between the independent and dependent variable, in the form of dividend management, is in the range of 0.4574. Overall, from the policy standpoint, the researcher suggests that the focus should be on the significance of the interest coverage ratio calculation. Overall, the researcher suggests that the overall importance should be on the calculation of the overall interest coverage ratio, in order for the financial risk to be reduced. Overall, the current hypothesis suggests that the calculation of the overall interest coverage ratio is affirmative. Overall, the researcher suggests that the overall importance should be on the calculation of the overall interest coverage ratio. Overall, the results from the present hypothesis will be useful to the government, policymakers, and the management hierarchy of the manufacturing firms. Overall, from the results, the researcher concludes that the overall hypothesis has operational validity, in that the results from the hypothesis suggest that the overall dividend management variable has an overall significant relationship, in the form of influence, on the overall performance variable of manufacturing firms. The main recommendation is that in order to increase performance, managers should implement the financial imperatives.
JEL: G30, M42, H83, D73
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DOI: http://dx.doi.org/10.46827/ejefr.v10i1.2117
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