The Effect of Cash Dividend Pay-out Policy on Stock Price Performance: A Case Study of Commercial Banks Listed in Dar es Salaam Stock Exchange

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Zacharia Yesaya
Edwin Bingireki


This study investigates the effect of the cash dividend pay-out policy on the stock price performance of commercial banks listed on the Dar es Salaam Stock Exchange (DSE) in Tanzania. The study was conducted in the United Republic of Tanzania, focusing specifically on commercial banks listed in DSE. The study population comprised eight financial reports of commercial banks listed in DSE from which a sample of five commercial banks were purposively selected. These financial reports served as secondary data sources for evaluating the effect of dividend pay-out policy on the stock price performance of the chosen banks during the period spanning from 2016 to 2022. Employing a correlation research design, this study adopted a quantitative research approach, and data analysis involved a combination of descriptive and inferential statistical techniques, supported by statistical software STATA. The panel data regression models of Fixed Effect and Random Effect were employed to analyse the panel data. The results of Hausman test were used to select the best model, where Random Effect model were found appropriate. Findings reveal that the cash dividend pay-out ratio has moderate and positive relationship with stock price performance. Likewise, Cash dividend pay-out ratio is statistically significant at 5% significance level in influencing the stock price performance at equal magnitude. This implies that the dividend pay-out ratio has significant effect on stock price performance, the fact which concurs with signalling theory. The increase in dividend pay-out is associated to increase in stock price performance and the decreasing dividend payments weakens stock price performance. The study recommends Tanzanian banks adopt a balanced dividend approach, considering financial stability and shareholder expectations. Future research should explore long-term dividend trends and decision-making processes with longitudinal and qualitative methods.

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Yesaya, Z. ., & Bingireki, E. . (2023). The Effect of Cash Dividend Pay-out Policy on Stock Price Performance: A Case Study of Commercial Banks Listed in Dar es Salaam Stock Exchange. The Accountancy and Business Review, 15(3), 51–64.


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