Determinants of Dividend Payout Ratio and Growth of Firms Listed at Dar Es Salaam Stock Exchange in Tanzania.

Msonde, George Robert (2021) Determinants of Dividend Payout Ratio and Growth of Firms Listed at Dar Es Salaam Stock Exchange in Tanzania. Masters thesis, The Open University of Tanzania.

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Abstract

This study evaluates the determinants for dividend payout ratio for growth of listed firms’ at Dare es Salaam Stock Exchange (DSE) for the period of 2008 to 2018 in Tanzania. The main objective of the study was to examine the determinants for dividend payout ratio for listed firms at DSE with three specific objectives namely: to examine the effect of profitability on dividend payout of the firm; and to assess the impact of liquidity and financial leverage on dividend payout of the firm. The study was guided by three theories of which are Dividend Irrelevance Theory, Bird –in-the Hand Theory and Tax Preference Theory. The research design is time series data which the analysis was carried out using Ordinary Least Square (OLS) approach. The finding results shows that, estimated profitability and liquidity were significant determinant dividends pay out for the firm in Tanzania and were positive parameter coefficients, indicate that profitability and liquidity increases the dividend payout also. On the other hands, the study found that, sales growth is a significant determinant of dividend payout and noted that, sales growth has a negative parameter coefficient which depicts that as growth of the firm’s increases the dividend payout decreases. Moreover, the study found that, firm size is not a significant determinant of dividend payout and in terms of parameter coefficient it can be seen that, it has a positive parameter coefficient. The study concludes that, profitability, liquidity, sales growth are statistically significant determinants of dividend payout ratio of the listed firm at DSE. The study recommend that the policymakers should ensure that, profitability, liquidity, sales growth to be taken into account when comes to policies review and formulation. Key words: Stock Exchange Rate, Dividend Payout Ratio, Profitability, Liquidity.

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