Relationship Between Dividend Payouts and Firm’s value in Kenya

Abstract

the main purpose of this research is to verify the relationship between dividend payout and the firm’s value in Kenya. The literature on dividend policy has produced a large body of theoretical and empirical research, especially following the publication of the dividend irrelevance hypothesis of Miller and Modigliani (1961). No general consensus has yet emerged after several decades of investigation and scholars can often disagree even about the same empirical evidence. This paper aims at providing the reader with a comprehensive understanding of dividends Policy and dividend payouts; perceived effects on firm’s value, by reviewing the main theories and explanations of dividend policy including dividend irrelevance hypothesis of Miller and Modigliani, bird-in-the-hand, tax-preference, clientele effects, signaling, and agency costs hypotheses. The paper also attempts to present the main empirical studies on corporate Dividend policy in Kenyan perspective