Effect of Age Diversity on Dividend Policy in Kenya

Abstract

In the modern corporations owners embrace mechanisms like age diversity to mitigate against managers failures to act in their interests. The purpose of this study is to examine how age affects dividend policy among Kenyan firms listed on the Nairobi Securities Exchange. The study was guided by agency, signaling, resource dependency and power circulation theories. The research design used was explanatory where all firms listed on the NSE were examined. Document analysis was used to collect secondary data from annual reports of firms. Data was analyzed using descriptive statistics such as the mean, median, and standard deviation and multiple regression analysis was done to examine the effects between age diversity and dividend policy in annual reports. The study was expected to contribute new knowledge on the relationship between board diversity and dividend policy as moderated by chief executive officer power. The results of the study revealed that age diversity did not influence dividend policy. The correlation results showed that age diversity (β = .005, p = .634). The study recommends that policy makers need to ensure development of regulations to enhance board diversity among firms since board diversity brings about overwhelming benefits to corporate owners by minimizing agency problems related to free cash flows hence enhance payout to shareholder and reduce risk of misallocation of excess resources by firm managers. The study also recommends further studies to be carried out on the relationship between board diversity and dividend policy on privately owned, SME’s, both listed and unlisted firms using similar study variables and a Longer period for the same study be considered to determine whether optimal results would be achieved.

Keywords: Age Diversity, Dividend, Policy, Resource dependency, power