Assessment of the effects of investors'perceptions on dividend policies of listed companies in Rwanda a survey of companies listed on the Rwanda stock exchange (RSE)

Abstract

This study sought to assess investors’ perceptions on dividend policy applied in listed companies operating in Rwanda, to investigate the investors ‘perception on dividend payments in listed companies operating in Rwanda, to assess the dividend payment policies in Rwanda listed companies and to assess the effect of investors ‘perception on dividends policy of Rwanda listed companies. This study considered 10 listed companies operating in Rwanda. Documentary technique, questionnaires, and unguided interview were used as instruments of data collection. A sample of 190 respondents selected from both board of directors and investors was used to collect primary data. The study applied both qualitative in nature as data analysis was done based on SPSS with descriptive model. The study revealed most investors in Rwanda listed firms rely on stable dividend policy expressed, they really like to withdraw their dividend payout at the end of every financial, they do not like to reinvest their dividend payouts. Regarding the dividends policy applied by listed firms in Rwanda, most of dividends are based on stable dividend policy among listed companies of Rwanda, it implies that most of shareholders are targeting the annual earnings on their common stocks as the policy require a regular annual payment of a certain percentage on the company profit instead of constant dividend policy whereby the payouts are variable depending on the amount of profits gained after financial years. It is not easy for any listed firm to introduce or initiate any other policy like residual or constant as they shareholders may be drained towards other listed companies. Thus, Dividend policy (Stable, constant or residual) is statistically significant to investors’ perceptions the P-value is 0.000<0.5 very strong correlation with a positive coefficient of 0.979 implying that investors’ perceptions influence positively the dividend policy. Based on the results, the dividend policy of =0.332 + (0.979*investors perception). The study suggests listed companies to introduce and adopt constant dividend policy and persuade stockholders on buying privileged and preferred stocks in Rwanda listed firms.