EFFECTS OF CORPORATE GOVERNANCE ON DIVIDEND PAYMENT AMONG SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN KENYA
Abstract
The determinants of firms’ dividend policies have long been a puzzle for Savings and Credit Co-operative Societies. The purpose of this study was to determine the effects of corporate governance on dividend payment among Savings and Credit Co-operative Societies in Kenya. The study was informed by signaling, Stakeholders’, Agency and Resource dependency theories of dividends. This study employed explanatory research design. The study targeted two respondents in the form of board members and accountant or general manager from each of the 60 Deposit Taking Societies in Nairobi City County registered under SASRA. Since the target population was small in number 120, this study was a census of one board member and accountant or general manager from each of the 60 Deposit taking Societies operating in Nairobi. The study collected both primary and secondary data. Both descriptive and inferential statistics was used to analyze data. Inferential statistics included in the study was Pearson Correlation and multiple regression analysis. The study concludes that board tenure determines dividend pay-out ratios. Corporations with longer board tenures provide higher dividends but the firms with shorter board tenures provide significantly lower dividends. Board independence and independence of sub-committees has a positive influence on dividend payout with a view to reducing free cash flow. Age heterogeneity improves the ability of directors to solve tasks with high complexity such as issues of debt and equity financing. The study recommends that organization and especially SACCOs need to take the issue of board tenure seriously because it affects dividend payment. They need to put in place members on longer board tenures. It is recommended that companies and specifically SACCOs need to consider board diversity issues since companies with the best diversity score high against their dividend payment. It is recommended that SACCOs should ensure that there are independent directors who facilitate continual monitoring of the firm by the market participants.
Keywords: Corporate governance, Dividend payment, Board tenure, Board gender Diversity, Board independence and Board age diversity
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DOI: http://dx.doi.org/10.61426/sjbcm.v3i4.325
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