Effects of interim dividend announcement on the value of a firm

Date
2016
Authors
Kipkosgei, Purity J
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Publisher
Strathmore University
Abstract
This research focuses on the impact of interim dividend announcement on the value of a firm. The purpose of this research , is to empirically investigate whether the magnitude of stock market reactions to-interim dividend is greater than final dividend announcements for companies listed Under the Nairobi Securities Exchange 20-Share Index. Out-of the 20 companies in the Index, 7 companies 'paid interim dividends under the period of study. The event study methodology was employed to analyze effects of both dividend announcements. The findings of this research show that the reaction by market participants to final dividend announcements in the Kenyan stock .market is stronger than interim dividend announcements. This contradicts previous research . that indicate interim -dividend 'announcements lead to a stronger reaction. The limitation of this study is small sample size due to the limited number of companies that pay interim dividends. The findings of this research will be useful to investors with vested interest in publicly traded companies for proper decision making. The study's originality stems from the fact that it focuses on the effects of both interim and final dividend announcement on Kenyan stock.
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