Investigating the effect of board characteristics on the dividend payout of commercial banks in Kenya
Date
2023
Authors
Mutai, D. C.
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Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
ABSTRACT Commercial banks' dividend payment policies vary since each firm selects what, how, and when to pay dividends to its shareholders. Despite operating in the same economic climate, some banks pay higher dividends while others pay lower dividends. The Board of directors legally decides the distribution of the earnings of a company. Is there a relationship between board characteristics and dividend payout? How do board characteristics affect the dividend payout of commercial banks in Kenya? To answer these questions, the study evaluated the effect of board characteristics on the dividend payout of commercial banks in Kenya. The study carried out an analysis of the 37 licensed banks commercial banks in Kenya from 2017 to 2021. The study was grounded using stakeholder and agency theories. The study used both secondary and primary data to achieve its objective. Secondary data was obtained from published annual reports of Commercial Banks and primary data was collected using questionnaires to get more insights into the perception of stakeholders regarding the relationship between board characteristics and dividend payout. The data was analyzed using logit and tobit regression models and the results indicated that board independence had a positive statistically significant effect on dividend payout of commercial banks in Kenya. Board gender diversity had a negative statistically significant effect (p value <0.1) on dividend payout of commercial banks in Kenya. Board size, board members’ average age and board average years of experience showed no statistically significant effect on dividend payout of commercial banks in Kenya. The study had a limitation of time as it focused only on five years’ period that is between 2017 to 2021. It is unclear if the study was done for a longer period, the same results would still hold. The study also did not incorporate all board characteristics hence future studies can consider incorporating that.
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Full- text thesis
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Citation
Mutai, D. C. (2023). Investigating the effect of board characteristics on the dividend payout of commercial banks in Kenya [Strathmore University]. http://hdl.handle.net/11071/13411