International Journal of Innovative Research and Development

Abstract

This paper captures aspects regarding relationships between corporate governance, dividend policy and performance of banks listed on Nairobi security exchange for 5year period from 2007-2011. Apart from the available researches which mainly show relationships of two aspects, the present study focuses on the relationship of three aspects of banks which interlink from stakeholders perspective and can cause economic decline or success. This paper finds that dividend yield for banks listed on NSE as proxy of dividend policy is significant and positively correlated to business risk andgrowth opportunities GO thus tend to follow signaling hypothesis, also positively correlated to CEO duality but negative and significant to board independence as corporate governance proxies. Return on assets ROA as a performance indicator is positively correlated to board size (number of directors) and is significant.

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