An Investigation into Effects of Dividend Policy on Financial Growth of Advertising Firms in Kenya

Effects of dividend policy on corporate financial growth, is a major concern of most entities. Whether dividends have an influence on the value of the firm, is an important question in dividend policy. This study aimed at investigating the effects of dividend policy on financial growth of media firms. The study was conducted in Nairobi at The Nation media Group Headquarters. Respondents were senior managers, middle level managers and ordinary shareholders. Descriptive research design was used to describe the nature, behavior and factors’ contributing to the study as a case study approach was adopted. Stratified random sampling technique was used to pick a sample size of 215 respondents to carry out the study. The significance of the study was to formulate dividend policies that suit financial environment, bring awareness to workers on how to deal with the shareholders on dividends issues and also to assist in determination of how much debt to be employed in the capital structure. The study revealed that investment policy on dividend payout affects financial growth of the firm through division of earnings between the stockholders and reinvestment into long-term projects. The study concluded that dividend policy is an integral decision in financial management because it maximizes shareholder’s wealth and has relevance on stock prices and firm’s value. The study therefore recommended that the firm should adopt an optimal dividend policy and effective and efficient capital structure which creates a balance between division of earnings and investment in long term projects.