Influence of Gender Diversity on Dividend Policy in Kenya

Abstract

Management of corporations has been faced by challenges emerging from internal managers not being able to effectively offer stewardship. The organizations owners therefore have to improvise means of ensuring that their interests are protected. The purpose of this study is to gender and age influence dividend policy among Kenyan firms listed on the Nairobi Securities Exchange. In the recent past, most corporations in developing economies experience unstable dividend payment hence the need to determine whether board diversity can remedy the dividend payment situation prevailing. 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 gender diversity and dividend policy in annual reports. The study was expected to assist in defining the role of gender diversity on dividend policy in emerging economies as well as determining whether gender diversity would act as a remedy to dividend policy puzzle among corporations. The results of the study revealed that gender diversity had influence on dividend policy of firms. The correlation results showed that gender diversity (r=.254, p= .000) had positive relationship with dividend policy. The results also show that gender diversity was the most important factor that influences dividend policy decisions. The study recommends that policy makers need to ensure development of regulations to enhance gender diversity among firms since gender 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: Stewardship, Gender Diversity, Dividend, Policy, Resource dependency, policy puzzle