Abstract
The declining and highly volatile firm value observed in the NSE over the last decade has raised concern among scholars and financial practitioners. A declining and turbulent firm value implies lost and unstable shareholders wealth which in turn increases risk to the stock holders. It is therefore important to ensure that the firm value is enhanced to ensure growth and stable wealth of the shareholders. The study was carried out to determine the effect of dividend decisions, economic growth and firms’ value of selected firms listed at Nairobi securities exchange Kenya. The target population was the 46 non-financial companies listed in the NSE. A census of all non-financial firms listed in the Nairobi Securities Exchange was done. The study utilized secondary data from financial reports as published in the NSE handbook and Kenya National Bureau of Statistics for the period between 2008 and 2016. Panel regressions analysis and Pearson’s product moment correlation analysis were used for inferential analysis while means and standard deviations were used for purposes of descriptive analysis. Feasible Generalized Least Square (FGLS) regression results indicated that dividend decisions (p=0.012, <0.05) had a statistically significant positive effect on firm value. Whisman test of moderation further indicated that GDP had significant positive moderation effect on the relationship between each of the dividend decisions and the firm value. The study concludes that; dividend yield has a very strong positive relationship with firm value. That is, increases/decreases in dividend yield will be accompanied by increases/decreases in firm value. The study therefore recommends that corporate managers increase the dividend payout in times of profitability Keywords : Dividend Decisions, Economic, Growth, Firm Value DOI: 10.7176/RJFA/11-18-06 Publication date: September 30 th 2020
Highlights
According to Wahyudi and Pawestri (2006) firm value is the amount the prospective buyers would be willing to pay if the firm was to be liquidated
Descriptive Analysis Results in Table 1 show the summary of the descriptive statistics of dividend decision, GDP growth rate
The study indicates a positive significant effect of dividend decisions proxied by dividend yield on firm value
Summary
According to Wahyudi and Pawestri (2006) firm value is the amount the prospective buyers would be willing to pay if the firm was to be liquidated. The firm value of companies listed in the NSE has faced periods of decline as evidenced by NSE 20 share index and market capitalization rate. GDP is likely to affect the relationship between the financial management decisions and firm value either positively or negatively. The GDP growth rate was utilized in the study to determine the moderating effect of GDP on the relationship between financial management decisions and firm value.
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