EVALUATING THE IMPACT OF DIVIDENDS PER SHARE ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED ON THE NAIROBI SECURITIES EXCHANGE
EVALUATING THE IMPACT OF DIVIDENDS PER SHARE ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS LISTED ON THE NAIROBI SECURITIES EXCHANGE
David M. Kayanda - School of Business and Economics, Mount Kenya University, Kenya
Andrew Songoro Nyanga’u - School of Business and Economics, Mount Kenya University, Kenya
ABSTRACT
The share price performance at the securities exchange is a good indicator of the financial health of banks and the overall status of any country's economy evaluating the impact of dividends per share on the financial performance of commercial banks listed on the Nairobi Securities Exchange. The specific objective of the study was to evaluating the impact of dividends per share on the financial performance of commercial banks listed on the Nairobi Securities Exchange. The study was supported by Bird in Hand Theory. A descriptive and correlational research design was used for the investigation. The data that was gathered from the five years of 2019–2023's annual financial reports. All eleven commercial banks that are listed on the NSE as of December 31, 2023, were the study's target audience. A sample size of ten listed commercial banks was chosen for the study using simple random sampling. Using a data collecting sheet, the study gathered secondary data from the Nairobi Securities Exchange's published annual financial reports. Descriptive statistics like mean, standard deviations, minimum, and maximum were used to analyze the collected data. Additionally, inferential analyses like regression and correlation were used in the study. Tables containing the analyzed data were displayed. The study unveiled that dividend per share had a positive and significant effect on financial performance of listed commercial banks in Kenya. Thus, increase in dividend per share increases financial performance of listed commercial banks in Kenya by 39.6%. Additionally, the study concluded that; dividend per share had strong, and positive significant correlation with financial performance of listed commercial banks in Kenya. The study recommended that listed commercial banks ought to increase DPS as it will indicate strong profitability, and signal positive future earnings. This will lead to increased financial performance. The study further recommends that banks ought to increase DPS so that they attract more investors, leading to increase in stock prices and hence boosts firm value in the market and enhance financial performan.
