THE INFLUENCE OF FINANCIAL PERFORMANCE ON DIVIDEND PAY OUT OF COMMERCIAL BANKS LISTED AT THE NAIROBI SECURITIES EXCHANGE, KENYA

This study sought to adduce empirical evidence on the influence of financial performance on dividend payout in the context of commercial banks listed at the Nairobi Securities Exchange (NSE) in Kenya. It was anchored on the liquidity preference, pecking order, and life cycle theories. The study used descriptive longitudinal design. Each of the required ratios was lifted from financial statements where directly reported, or calculated. The ratios were then entered into Statistical Package for Social Sciences (SPSS) version 20. The data were then processed and subjected to multi-collinearity test, then descriptive and regression analyses. The input variable in the study was the financial performance measured by the annual profitability, liquidity, and capital structure ratios. The general objective was met through multiple regression. The study demonstrated a significant influence of the combined factors: profitability; liquidity; and capital structure on dividend payout of the commercial banks listed at the NSE. The study determined that profitability was indeed a significant influence of dividend payout. The study also revealed that liquidity was not a significant influence of dividend payout of the commercial banks listed at the NSE. The study finally revealed that capital structure had no statistically significant influence on dividend payout. This study therefore suggested a further study focusing on the same concepts, but inclined on the unlisted commercial banks due to their relatively less public scrutiny. The study also recommended a study on the influence of financial performance on all the 64 firms listed at the NSE, and possibly a comparison among the various economic sectors. The study further suggested a study on the same context, but using a longer longitudinal span since that would enhance more validity of the measures of association between the variables. The study finally recommended a study focusing on the non-financial dimensions of dividend payout including the mode of payment, regularity of payments, et cetera. Key Words: Financial Performance, Profitability, Liquidity, Capital Structure, Dividend Payout CITATION: Jepkemoi, A., Odoyo, F., Simiyu, R., Onyango, R. (2019). The influence of financial performance on dividend payout of commercial banks listed at the Nairobi Securities Exchange, Kenya. The Strategic Journal of Business & Change Management, 6 (3), 371 – 387.