THE EFFECTS OF DIVIDENDS ON THE PRICE OF ORDINARY SHARES IN SOME QUOTED COMPANIES

Thesis Abstract

The effect on dividends on the price of ordinary shares is designed to establish and explain the effect of dividends on the price of ordinary shares in trying to ascertain the objectives of the study. Two research hypotheses were formulated and tested with a statistical tool called simple regression analysis with the data collected from the secondary data. The result of the regression analysis yp=a+bx = 1,68/ +0.14x indicates that there is increase in the number of share dividend per share. The coefficient of determination r2 of 99% revealed the distance in variation of the variables. The coefficient of correlation (r) of 84% reveals that there is positive relation between the level of price of share and dividend per share the t-tested finally revealed that the computed to value of 10.85 is greater than the critical t-tab of 3.18 at n-2 = 5-2 = 3 degree of freedom. The formulated hypothesis Ho which states that there is positive and significant relationship between the price of ordinary shares and dividend per share is accepted and H1 which states that dividends declared by listed firms have a significant effect on the price of their ordinary shares is rejected, we thereby recommend that we need to ensure that as much as dividends would not be paid detrimental to a firm’s investment programmes and should be paid to investors.