dc.description.abstract |
Market value has gained considerable prominence in influencing investment decisions among
listed firms in many security markets worldwide. Over the years, listed firms have witnessed
market value fluctuations and increased shareholder activism. This study was motivated by the
fact that whereas scholars are keen on the effects of shareholder activism on market value, most of
the studies, if not all, are either looking for direct effects or indirect effects. None is keen on the
conditional effect of the third variable of Corporate Social Responsibility Disclosure (CSRD).
Previous studies have shown conflicting results of shareholder activism in different security
markets. This study sought to determine the conditional indirect effect of CSRD on the
relationship between shareholder activism and market value through dividend policy among firms
listed at Nairobi Security Exchange (NSE). The study objectives are to; investigate the direct
effect of shareholder activism on the market value of listed firms at NSE, assess the direct effect
of shareholder activism on dividend policy of firms listed at NSE, determine the direct effect of
dividend policy on the market value of firms listed at NSE, establish the mediating effect of
dividend policy on the relationship between shareholder activism and market value of firms listed
at NSE, investigate the moderating effect of CSRD on the relationship between shareholder
activism and market value of firms listed at NSE, assess the moderating effect of CSRD on the
relationship between dividend policy and market value of firms listed at NSE and determine the
moderated mediation effect of CSRD and dividend policy on the relationship between shareholder
activism and market value among listed firms at NSE in Kenya. The study was guided by the
Modigliani and Miller (MM) theory, Gordon theory of relevance, stakeholder management theory,
and agency theory. The study employed an explanatory research design with the study population
of 64 listed firms at the Nairobi Securities exchange. Fifty four (54) firms were selected. The
study specifically adopted the ex-post facto design; an after-the-fact research design suitable for
testing hypotheses about cause-and-effect relationships such as was expected in this study. The
study used secondary data from annual/published financial reports of firms listed in NSE between
2008 and 2017. Both descriptive and inferential statistics were used to analyze data.Descriptive
statistics included means, standard deviations, minimum and maximum values, skewness, kurtosis
and Jarque-Bera. The main inferential statistics was the longitudinal/ panel data regressions. Key
findings indicated moderated mediation effect whereby shareholder activism had a conditional
indirect effect on market value through dividend policy given by -3.56 + 0.077 CSRD under fixed
time and fixed effects. The conditional direct effect of shareholder activism on market value was
given by 13.2 – 16.6 CSRD, under fixed time and firm effects. Other findings indicated that
shareholder activism had a positive and significant effect on market value (b=0.696, p<IzI=0.01).
Shareholder activism had a positive and significant effect on dividend policy (b= 0.099, p<IzI =
0.01). The dividend policy had negative and no significant effect on market share (b=-1.953,
p>ItI=0.05). Dividend policy did not mediate the relationship between shareholder activism and
the market value of listed firms at NSE (a*b=-0.291,p>IzI=0.05). CSRD moderated the
relationship between shareholder activism and market value (b= -17.3 p<0.01), and CSRD
moderated the relationship between dividend policy and market value of firms (For interaction b =
-82.85, p<0.01). The study concluded that shareholder activism had significant effects on both
market value and dividend policy. Despite having a negative effect on market value, dividend
policy did not mediate the relationship between shareholder activism and market value. The main
conclusion arising from the study was that in the context of firms listed at the NSE, CSRD had
conditional interactive effects with shareholder activism, dividend policy, and the market value. It
recommended that listed firms need to take cognizance of the important role that shareholder
activism plays in market value and dividend policies of the firm. Need to be explicit when framing
dividend policies due to their potential impacts on the market value. When bringing on board
CSRD practices firms should be conscious of potential contributions of contextual factors
including firm size and growth. The study suggested a further study which incorporates other
variables in moderated mediation such as capital structure, corporate governance and minority
share ownership on market value. |
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