DIVIDEND DISCLOSURE AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
DIVIDEND DISCLOSURE AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA
Mutune, J. M. - Msc Finance Student, School of Business and Entrepreneurship, Jomo Kenyatta University of Agriculture and Technology, Kenya
Shibairo, M. - Lecturer, School of Business and Economics, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Purpose: The manufacturing and allied sectors play a critical role in Kenya’s industrial development and economic growth. However, firms listed under this sector at the NSE have experienced declining financial performance in recent years, raising concerns regarding the operational efficiency, competitiveness, and investor confidence. Dividend disclosure serve as important communication mechanisms between management and investors by reducing information asymmetry and enhancing transparency. Despite their importance, empirical evidence on how these disclosure practices influence financial performance within Kenya’s manufacturing sector remains limited and inconclusive. The study assessed the effect of dividend disclosure on financial performance. The study was anchored on Agency Theory. Methodology: A descriptive research design incorporating a quantitative panel data approach was adopted. The target population comprised all ten manufacturing and allied firms listed at the NSE, and a census approach was employed. Secondary data was collected from published annual reports, NSE publications, and CMA reports covering the period 2019–2025. Financial performance was measured using ROA while dividend disclosure was measured using dividend yield. Data were analyzed using descriptive statistics, correlation analysis, and panel regression analysis. Findings: The findings revealed that dividend disclosure (β = 0.286, p < 0.05) had significant positive effects on financial performance. The model explained 61.0% of the variation in financial performance (R² = 0.610), indicating substantial explanatory power, while 39.0% of the variation was attributable to other factors outside the scope of the study. The study concludes that dividend disclosure significantly influence the financial performance of manufacturing and allied firms listed at the NSE. Recommendations: The study recommends that manufacturing firms adopt transparent and consistent dividend disclosure policies. The findings provide valuable insights for corporate managers, investors, regulators, and policymakers seeking to improve transparency, investor confidence, and financial performance within Kenya’s manufacturing sector.
