The Effect Of Dividend Payment Method On Share Price Volatility In The Nairobi Securities Exchange

Abstract

The study sought to evaluate how dividend payment methods can cause share price volatility of firms listed in NSE. Many people have conducted research in this field but none has been able to connect dividend payment methods and share price volatility. In our study we sought we have been able to close this gap. This was with a bias on finding out how cash dividend, stock dividend, stock repurchase, scrip dividends and property dividends can cause share price volatility. The study established relationship between dividend policy and share price volatility and to assess how dividend policy affects share price of the firms listed in the Nairobi stocks exchange. The study covered the period ranging from 2013 to 2019. It focused on share prices within the stated period. Between 2013 and 2019, listed firms share prices fluctuated greatly to the point of making investors not to make proper decisions. We have investigated whether this decline on share prices has anything to do with the choice of dividend payment method adopted by the company. Data consisted of share price volatility as the dependent variable and cash dividends per share, Share Dividends per share, repurchase price per share, scrip dividends per share and property dividends per share as independent variables for the 50 listed companies sampled for the study. The study employed a descriptive research design entailing secondary data evaluation. The researcher equally employed secondary data interrogation sheet trained on the share prices, the cash dividend payouts, stock dividend declaration and related parameters of the years in focus. Data was analyzed by use of descriptive and inferential statistics with the help of STATA. This enabled the researcher to reach on the recommended conclusion.