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Research Paper | Financial Engineering | Kenya | Volume 4 Issue 2, February 2015
The Determinants of Dividend Smoothing among Listed Companies at the Nairobi Securities Exchange
Abala P. Otieno | Magadi S. Oloo 
Abstract: Dividend smoothing is when you keep your dividends relative to your Earnings per share. Not too high dividends and not too low. It may also imply setting a dividend price that does not necessarily conform to retained earnings. The dividend smoothing decision can affect the value of the firm by changing the firms expected earnings in the preceding years, its cost of capital or both. One of the most important objectives of determining factors leading to dividend smoothing of the firm is to ensure that we maximize shareholders wealth while we protect the value of the firm in terms of retained earnings. This project was on the determinants of dividend smoothing in the Kenyan firms with special reference to those listed in the NSE. This study sought to establish the determinants of dividend smoothing of the listed companies in Kenya. The study focused on the firms that have been paying out dividends in the last five years. Expectedly, the results of the study were sufficient to give an insight into the determinants of dividend smoothing among the listed companies in Kenya, which were size of the firm, firms earning and profitability, firms agency conflict, ownership structure, taxes, information asymmetry and growth stage of the firm. The study employed univariate analysis and multiple regressions to measure the impact of the different factors on the companys dividend payout. The data that was used was for the last five years that is, from 2008 to 2012 since the more recent the data the more it is likely to give the true representation in the industry.
Keywords: Dividend Smoothing, Leverage, Equity Financing, Financial Performance, Earnings per Share, Dividend per Share
Edition: Volume 4 Issue 2, February 2015,
Pages: 1851 - 1861