Dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. Black’s Law dictionary defines dividends to mean the share that is allotted and entitled to each person in a share in the division of profits. This may mean a fund set aside by a corporation out of its profits to be distributed among the shareholders, or a proportional amount allotted to each. A dividend policy is the express or implied decision of the Directors of a company on how the remaining amount of earnings (past or present) shall be distributed among the shareholders of the corporation. It is a procedure that the management follows in forming dividend payout decisions on cash distributions to shareholders”. A dividend policy is amongst the most discussed area and theory of corporate finance under companies. Previously research has been done; Black described it as a “puzzle”. Further attempts and other research works have been done to find more insight and resolve the dividend puzzle. Allen and others in their book, summarized their consensus when they concluded “although a number of theories have been developed and discussed in the literature to explain their pervasive presence, dividends remain one of the most difficult and confusing puzzle in corporate finance”. Dividend issues have attracted much interest from academicians and researchers. Black stated that “The harder we look at the dividend picture, the more it seems like a puzzle, with pieces that don’t fit together”. It is among the unresolved problems under corporate finance on which finance literatures tend to offer inadequate explanation and insight for observed dividend behavior patterns of the firms that plays an important role on dividend payout policy of companies’ in decision making. Parallel to other decisions, the company directors should consider the importance of dividend policy decisions because if a firm decides to pay more dividends, it retains fewer funds for investment purposes, and the company may be forced to revert to capital markets to gain funds. In developed economies, the decision whether to pay dividends or to keep them as retained earnings has been construed very carefully by both investors and the management of the firm. Many studies regarding the dividend policy have been done and provided empirical evidence regarding the determinants of dividend policy. The question of why firms pay dividends from their earnings remains unexplained. John Lintner is of the view that since dividend policy remains to be a controversial issue; he poses some of the questions that remain unanswered which include; what are the factors that determine dividend policy? Is dividend policy determined dependently or independently? Other researchers found dividend payout to be the function of firm’s profitability. The task of determining a proper payout policy poses difficulties of balancing many conflicting forces. The important elements are not difficult to identify but the interactions between those elements are complex and no easy answer exists, on the basis of such complexity a conclusion on such aspect can be drawn that, much more empirical and theoretical research on the subject of dividends is required before a consensus can be reached. Researchers have primarily focused on advanced markets but still further insight is needed with regards to the payment of dividend, this can be gained by examining developing countries, like Tanzania which currently has inadequate literatures and no study has been established to solve the dividend puzzle in Tanzania. This study intends to find the law and practice relating to dividend in Tanzania under the Companies Act, 2002 by tracing on dividends payment policy for companies and to check factors or determinants that guide company directors when apportioning dividends to its shareholders. In Tanzania the main law dealing with companies is the Companies Act Cap. 212 which was enacted in 1929. This law governed companies that dealt with trade and other affiliations including the assessment of tax on nominal capital, regulation of dividends, surplus and related matters. During a period of over 77 years, the legislation covered not only the tail end of the colonial period but also the period of state-planned economy through to liberalization in the 1990s. This period led to various changes to the Tanzanian economy. The new reforms were contained in the Companies Act, No.12 of 2002, which came into force from the 1s of March 2006. Its enactment was basically to provide for more comprehensive provisions for regulation and control of companies, associations and related matters. 1.2 Statement of the Problem Research has been conducted on dividends from different periods though the reasons with regards to dividend payout policy still remains unresolved in corporate finance and further insight is important to increase the understanding of the subject. Further research is needed in order to obtain an understanding on the theory and practical analysis to get a clear view on the practice which companies use in declaration of dividend payout to its shareholders. Payment of dividends differs from one company to another; as each company decides on what, how and when to pay dividend to its shareholder. Some companies pay higher while others pay less dividends although both operate under the same business environment. The question on how companies set their dividends or declare such dividends and why do firms pay dividend impose unsolved problem in the Tanzanian context. This shows that there is no uniformity between such companies, thus it remains to be one of the most debated issues within the field of corporate finance. Despite the available legislation under the Companies Act, No.12 of 2002 in Tanzania, the term Dividend itself is not defined under the Act and the law does not compel companies to declare dividend but rather companies develop their own policies. Under the current legislation on companies there is no policy, criteria or determinants that lay the basis for declaring dividends. This study will focus on addressing the lacuna under the law, the need for the law to establish policies and or criteria that are uniform to all companies in respect to declaring dividends and the quest for a comprehensive legal framework to address the lacuna. 1.3 Research Objectives 1.3.1 General Objectives The main objective of this graduate Essay is to examine and hence develop policies and or criteria as determinants for companies to adopt prior to declaring dividend payment and the need to have a comprehensive legislation to provide for such policies and or criteria for practice under the law. The objectives of this study were to examine and develop policies and or criteria for companies to adopt when declaring dividend payment to its shareholders. 1.3.2 Specific Objectives a) To examine whether profitability has a positive and significant impact on dividend payment b) To examine if growth of a company has a negative and significant impact on dividend payment 1.4 Significance of the Study The study will help to show how corporate managers should decide upon declaring and payment of dividends and what should be considered before making a decision. Such practices decided by a corporate management would create a benchmark for doing well and therefore more dividends can be distributed to shareholders while maintaining the overall health and stability of the company. The study will also offer a significant contribution to existing theoretical and empirical knowledge regarding declaring of dividends by companies. The study may aid in reference and lay a basis for further research on determinants of dividend payout by providing guidance material and reference to enhance corporate finance knowledge. 1.5 Literature Review Brealey and Myers assert that dividend is set by the firm’s board of directors. The declaration of such dividend will be made to the registered shareholders. The author’s work positively acknowledges in the practice done by companies when paying dividends to its shareholders, however, the authors only pointed out the practice but failing to show what are the determinants or criteria a company uses before declaring payment of dividends. There is variation in legal, tax and accounting policies of different companies, due to such variation there is no unified form of practice or procedure set out to declare such payments. This study will help to fill the existing knowledge gap by empirically pointing out the significant factors that contributes to developing dividend payout policy in companies; such disparity concerns the essentiality of lacking a legal rule or regulations within the context of dividend payout policy. Okafor in his study, having investigated the connection between dividend policy and share prices unsteadiness from Nigerian firms, he noted that dividend payouts and dividend profit are impacted by share prices. The dividend payout ratio depends on the firm’s profitability which would have a positive and negative effect. This is because firms with high profits are willing to pay higher amounts of dividends, hence a positive relationship is expected between profitability of a firm and its dividends payments. In this literature, the author came up with a conclusion that dividend payout policy depends on a firm’s profitability, it is obvious that the text does not aim at citing any criterion but rather showing what is done by such firms, this gap has not been addressed under the framework of the legislation i.e. Companies Act. This research will try to find out the impact of share prices and their value in affecting dividend payout to shareholders of a company. Ajmi and Hussain are of the view that profitability is one of the significant determinants of dividend payments. From a study they conducted among 54 Saudi-listed firms between 1990 to 2006, results showed that, firms reporting lower earnings as their profit have a tendency of skipping dividends or even pay low dividends. Firms with a strong cash ratio on held shares will enable shareholders to be payed dividends from generated profits. The practice in Tanzania is not uniform as companies vary in practice on the procedure upon declaring dividend. This research will not only focus on determinants and criteria used by companies when declaring and paying dividends but will also look on the law and practice under the Companies Act, 2002. It is from such company practice that profitability is seen as a determinant factor but the absence of clear policies to guide such dividend declaration in such firms is a gap that has been identified, firms set their own procedures for practice. In Tanzania, the payment of dividend is under Section 180 (1) which states that, a company may in a general meeting declare dividends in respect of any accounting period or other period. However, the Act does not define the term dividend. Baker and Powell are of the view that, there is still no clarification on what factors influence dividend payout policy. The question and reasons on why companies pay dividends from their earnings still remains unexplained. They conclude that, despite a number of theories being developed in literature writings to explain their pervasive presence, dividends remain to be a complicated area when dealing with corporate funds. The actual motivation behind declaring dividends remains unresolved in company dealings thus advanced research is vital to enhance its basis. This study aimed at finding out the factors behind which companies use in order to formulate dividend policies and to check if such identified factors revealed in theoretical and empirical literature could aid and guide company directors upon fixing dividends. ? 1.6 Hypothesis Under corporate finance in Tanzania, under the Companies Act No.12 of 2002 there is lack of policies and/or criteria used for declaring dividend payment. The law, practice concerning declaring, and payment of dividends to shareholders is not a uniform practice amongst corporate firms. The weakness in the Law and practice can be remedied by adoption and formulation of policies and laws that govern such process to supplement the Companies Act and acquiring precedence from other jurisdictions that have best practices. 1.7 Research Methodology and Methods This is an analytical legal Essay in which the law pertaining to companies in Tanzania (Companies Act, Act. no 12 Cap 212) and different literature on determinants of dividend payment under corporate finance as well practices of companies when declaring dividends were critically analyzed. This research mainly based on library and internet search. The study used two variables, which concluded that, the above factors have a strong influence on dividend policy of the individual firms. The correlation coefficient for all variables used in this study showed the relationship with dividend yield; however, profitability, liquidity, debt ratio and growth had a positive association with yield as significant factors firms use to declare or determine a dividend payout policy. This study considered factors which appeared most frequently in the firms as determinants of dividend policy and for which data could be obtained in Tanzania. 1.7.1 Research Design This study focuses on examining different determinants that companies use when declaring dividends, which have been attributed by variation of company practices lacking uniformity. The research approach in this study is qualitative and employs explorative method. The method has been used due to the fact that, the aim of the study was to draw inferences from various literature reviews on company practices regarding the determinants of dividend payout. Under qualitative and exploratory method, data can be obtained through looking at the criteria’s or factors that company directors use and thus analyze such data to test the stated hypothesis. This involved examining various company practices from different companies listed under the Dar es Salaam Stock Exchange. 1.7.2 Data Collection The researcher employed primarily Secondary tools of data collection to gather necessary data. Therefore, the helpful documentary was the University of Dar es Salaam Library within which different data was extracted. The study focused on Tanzanian (domestic) firms primarily those listed on the Dar es Salaam Stock Exchange. This study tends to examine the determinants of dividend payout from data collected from selected and listed companies that declared dividends, both in the interim period and the final period between 2007 and 2017. Companies that were newly listed, particularly those that had been listed on the stock market for less than two years, were not considered for sampling. Basing on the above criterion, two (2) companies were selected for this study from the companies listed. The selection of secondary data was due to the nature of study of ascertaining how dividend payout varies between the companies over a certain period of time as declared by company directors in a meeting rather than why dividend is paid or not. 1.7.3 Media and Search Engines The study extensively harnessed online resources from legal and other institutions such as companies, websites and various records. The rationale behind employing this method of data collection was the need to collect as much information as possible from other jurisdictions relevant to the study. CHAPTER TWO LEGAL FRAMEWORK RELATING TO DIVIDENDS UNDER THE COMPANIES ACT 2.1 Introduction This part analyses the legal regime governing the payment of dividends and its determinants as practiced by companies by not only looking at the law and practice under the Companies Act, Act.No.12 Cap 212 but also to further examine the criteria adopted by company directors. A company denotes an association of a number of people for some common object or objects. 2.2 The Legal Framework The law in Tanzania recognizes both private and public companies, which are regulated by the Companies Act. A company limited by share or limited by guarantee, in order to be registered, it should be accompanied with the memorandum and Articles of Association. These documents should be signed by the subscribers and should contain regulations for the company. In addition, the law requires the Articles to be written in English language and printed. Furthermore, payment of dividend is stipulated under the provisions of section 180 (1) which states that, a company may in a general meeting declare dividends. The payment of such dividends will be upon the recommendation of the directors, if such declaration is rejected or varied by the company in general meeting as per Section 180(2) of the Act. However, under Section 180(3) (a) (b) a company may pay a dividend; out of its realized profits less its realised losses, or out of its realised revenue profits less its revenue losses, whether realised or unrealised, this is done by the directors under belief that upon paying such dividends, the company can discharge its liabilities. For instance, Sajid Gul et al , he carried an investigation on the impact of companies basing on specific factors relating to dividend payout policy by sampling eighteen (18) banks listed in Karachi Stock Exchange (KSE) for a period between 2006-2011. The explanatory variables under a dividend policy included, firm size ; risk, profitability, firm’s growth and leverage where by simple correlation was used. The results showed, among the eighteen (18) banks eleven (11) banks paid dividends while seven banks do not. The results show independent variables such as profitability, firm size and growth have a positive correlation when the dependent variables are dividend earnings or yield and dividend payout ratio. The author has tried to point out the factors that can warrant payment of dividends, these vary from firm size & risk but also profitability of which there is variance between one firm and another, in the absence of no unified and acceptable practice, each case will depend on the firm’s profits. In this aspect, three contradicting theories on the aspect of dividend payout policy of firms are analyzed; first, in Modigliani-Miller theory also known as Dividend Irrelevance theory , this argues that investors may not be concerned about the amount of dividend as it has no influence on the value of a firm. This theory implies any payout is OK, though its assumptions are unrealistic (no taxes or brokerage costs), hence may not be true. Secondly, is Bird-in-the-hand or Dividends Preference theory as propounded by Gordon and Lintner argues that, investors prefer a high payout. They argue that investor’s value dividends more than capital gains, this theory is familiar to an old saying:” a bird in the hand is worth two in the bush.” In this theory,” the bird in the hand” refers to dividends while “the bush” refers to capital gains. Thirdly, tax preference theory this entails that investors prefer a low payout. Retained earnings lead to long-term capital gains, which are taxed at lower rates than dividends. Henceforth, firms should set a low payout ratio of dividend policy basing on tax preference. Such diverging views on dividend payout policy is why dividends and factors behind their declaration are still subject to discussion. Other research that has been done show payment of dividends has a relationship between factors such as firm size, profitability (earnings), cash flow and tax. Amidu and Abor investigated the determinants of dividend payout policy on a six-year period between 1998 and 2003 for listed firms in Ghana stock Exchange, twenty firms which were used as sample. The results show that 76% of the listed firms provide a positive relation between dividend payout rate and profitability as well as cash flow and tax. Significant variables from the results were profitability, cash flow and sale growth. This shows that profitable companies equally pay more dividends. Companies that have a higher market-to-book value, more investment opportunities and more cash flow are likely to pay dividends. This shows that each company has its own unique way of forming and carrying out a dividend payout policy to its shareholders. Osuala found that profitability and return on equity affect dividend payments. Dividend is allocated as a fixed amount per share to shareholders of a company at certain intervals. In the course of running a firm, the distribution of profits and the recommendations are made by the company directors. Upon declaration of dividends, it is an obligation to pay corporate tax including taxes to the proper government authorities. Nuredin studied factors that influence dividend policy in the Ethiopian insurance industry in an in-depth interview with company officials. He further analyzed a range of determinants of dividend policy i.e. profitability, growth, liquidity, size and leverage of the firm. Evidence from the study showed that profitability, liquidity and growth are the most important factors that affect dividend payout policy of insurance companies in Ethiopia. These had a positive impact on payment of dividends. Under such analysis, the theories advanced try to explain the factors behind dividend payout policy each of which centers on the idea of dividend theory. These give more insight as to why firms should pay dividends or not. 2.3 Dividend Policy Issues In the absence of uniform guidelines or criteria from the Dar es Salaam Stock Exchange or companies as far as dividend policies are concerned, only policies exist and these have been described in the prospectus of each listed company as follows; 2.3.1 TCC In 1961, Tanzania Cigarette Company (TCC) was established as East African Tobacco, with the government of Tanzania acquiring 60% equity in the Company, as part of government’s Nationalization program and further purchased 40% in 1975. Under TCC, the practice is that upon declaration, dividends are payable prior to the recommendation of the Board and later approval in the general meeting. The Board may before recommending; can apportion the profits of the company as it thinks proper as a reserve but further without placing a reserve, it carry forward any profits the Board thinks prudent not to distribute. Payment of dividends may be done through a cheque to the registered shareholders from Dar es Salaam Stock Exchange through a public notice on an aforementioned date. The declaration can be interim, special or final ordinary dividends. 2.3.2 TBL Tanzania Breweries Limited is a company that engages in production, distribution and sale of malt beer, non-alcoholic malt beverages and alcoholic fruit beverages. Through its board, it approved and declared its first dividend payment in year 2017 to its shareholders on this 15th August 2017. Such dividends upon declaration may be invested or allocated according to amounts paid on the shares. Therefore, no dividends shall be paid than those out of profits, neither shall it bear interest against the company. 2.4 Procedure for Declaration of Dividend 1. The Company will convene a Board meeting to deliberate on the annual accounts and recommend the amount of dividend to be paid. 2. A Report will be prepared by the board of directors to recommend the declaration of dividend. This will then be presented to the shareholders for deliberation and approval in the Annual General Meeting. 3. The General Meeting shall be convened for passing a resolution for the payment of dividends to shareholders of the company. The law under the Companies Act uses the word “may” denoting it is a discretion placed upon the company and its shareholders through its directors in general meetings to declare such payments. Notwithstanding this position of the law, the Act does not provide for the meaning or define the word “dividend” as used under the provision of Section 180 of the Act and its subsequent subsections. Furthermore, the law does not provide or lay down criteria or determinants of dividend payout to be used by companies when declaring dividends. Such non-correspondence and lack of uniformity by company practices through their director’s is an area of concern to be addressed. The dividend policy ratio, which is the dependent variable, is defined as the dividend per share. The explanatory variables include profitability, liquidity, growth and leverage which were subject to analysis and discussion. 2.5 Statement of Hypothesis Relationship between a firm’s Profitability and Dividend Payout The dividend payout ratio of these companies depends on the firm’s profitability. Firms with higher earnings are in a position to pay higher amounts of dividends thus creating a positive connection between a firm’s profitability and its dividend payments. This position is also supported by signaling theory of dividend policy. A company announcing an increase in dividend payouts creates an indication that its future prospects are positive. A firm that has relatively stable profits or earnings can predict how its future trends will be, in this manner there’s a likelihood of a higher payout ratio of its earnings compared to firms with fluctuating earnings. Therefore, basing on the above discussion, the study hypothesized that; profitability has a positive and significant impact on dividend payout policy of such companies. ? Relationship between a firms Liquidity and Dividend Payout Liquidity is a vital factor that affects the payment of dividends. The correlation and comparison between a firm’s liquidity position in relation to its dividend payment is important. Consequently, the payment of dividend will depend on the firm having a strong cash position, such allocation not only depends on the profitability of firms but also depends on liquidity. As a factor captured under literature analysis in so far as determinants of dividend payout are concerned, corporate liquidity or cash flows position cannot happen if a company is in shortage of cash and low liquidity level, it becomes difficult to have high payment of dividends to its shareholders. Payments of dividends depend more on cash flows, which shows the company’s ability to pay dividends, than on current earnings, which are less heavily influenced by accounting practices. Hence, liquidity of a firm has a bearing when a company pays dividends, as a determinant or criteria it has a positive and significant impact on dividend payout policy of a company. ? Relationship between a firms Growth and Dividend Payout Growth is the ability of the firm to remain at the same level of development at a certain rate compared with other firms. Ho argues that firms with high growth opportunity are expected to spend more on new projects for expansion purposes. This results to less payment of dividend to its shareholders. Chang and Rhee were of the view that, a higher growth opportunity required more cash for expansion. This leads to retaining earnings, rather than distributing dividends. Therefore, the hypothesis of this determinant had a bearing that, growth has a negative and significant impact on dividend payout policy of a firm. CHAPTER THREE DATA ANALYSIS AND RESEARCH FINDINGS 3.1 Introduction This chapter describes the analysis of data followed by a discussion of the research findings. The findings relate to the research hypothesis that guided the study. Data was analyzed to identify and examine the criteria or determinants used by companies to declare dividends. The analysis was based on variation of company practices. Data was obtained from primarily secondary sources of data such as literatures, annual reports, formulated theories and internet search. 3.2 Methods of Data Analysis and Presentation of Data A qualitative and exploratory analysis was used to identify what criteria or determinants company directors use on payment of dividend. A total number of two (2) companies were used to test the hypothesis. Among the selected variables, each company had a unique practice. Such variation amounted to such companies lacking uniformity in their practice. This was a research gap under the study and specifically under the law i.e. Companies Act, No.12 Cap 212 which has a lacuna in relation to law but also practice on payment of dividends in Tanzania. ? 3.3 Corporate Dividend policy determinants Dividend decisions in the corporate sector are governed by large number of determinants. Enumerated below are the key variables identified as per available literature along with the relationship with dividend payout ratio of the firms in relation to Tanzania Breweries Limited and Tanzania Cigarette Company. 3.3.1 Firms Profitability and Dividend Payout The key determinant of dividend payments is the current earnings which represents the capacity of a firm to pay dividends. Profitability has a positive relationship with dividends. In a study conducted at Tanzania Breweries Limited reported, in its results for the financial year ended 31 March 2016 the company in sales revenue registered a 4% growth due to negative mix of Wines and Spirits and a higher percentage of affordable beer in the portfolio. This resulted in operating a profit growth of 4% amounting to TShs 330,070 million . From this sound financial performance, it was possible for the company to propose a dividend payment of TShs 176,292 million for the year which works out to be a record Tshs 600 per share, for the company shareholders. Similarly, Tanzania Cigarette Company recorded profit as a result of gross turnover increased by 1% to TZS 499.5 billion in 2016 compared to TZS 496.7 billion in 2015. Nevertheless, the company’s net profit grew by 4.5% whereas a net profit of TZS 68.7 billion in 2016 versus TZS 65.7 billion in 2015. In view of the results the Board of Directors of TCC, it recommended a final ordinary gross dividend of TZS 200 per share (2015: TZS 200 per share) and a special gross dividend of TZS 100 per share (2015: TZS 100 per share). With the interim gross dividend of TZS 300 per share paid in November 2016, the total dividend for the year ended December 31, 2016 is TZS 600 per share (2015: TZS 600 per share). This rather shows that profitability has a positive impact in order to determine dividend payout in a company. Consequently, firms with higher earnings are in a position to pay higher amounts of dividends as well as creating a positive connection between a firm’s profitability and its dividend payments. 3.3.2 Firms Liquidity and Dividend Payout Payments of dividends depend more on cash flows, which shows the company’s ability to pay dividends to its shareholders. The data acquired from the two companies i.e. Tanzania Breweries Limited and Tanzania Cigarette Company denoted the level of liquidity in terms of cash growth and earnings which grew by profit growth of 4% amounting to TShs 330,070 million and eventual payment of dividends worth TShs 176,292 million for the year under TBL and respectively a gross turnover increase by 1% to TZS 499.5 billion in 2016 by TCC with the company’s net profit growing by 4.5% with a net profit of TZS 68.7 billion in 2016 compared to TZS 65.7 billion in 2015. A firm may have adequate earnings to declare dividends, but it may not have sufficient cash to pay the same. The liquidity position of a company is expected to be positively related to dividend payment. 3.3.3 Firms Growth and Dividend Payout An increase in sales generates increased working capital requirement, which in turn may adversely affect dividend payments. This implies a negative relationship between dividend and sales growth. The increased working capital requirement between TBL and TCC on annual and yearly basis shows this as shown in their respective annual reports, the sales growth of a firm can be used as a determinant factor of a dividend policy. Tanzania Breweries Limited (TBL) had posted six per cent profit increase to 228.98bn/- for the period year ending March 2016 compared to 216.55bn/- registered in the previous year, despite challenging market and economic conditions. The company’s financial results show a four per cent revenue increase to 1.11trillion/- from 1.073trillion/- of the preceding year, driven mainly by volume growth mainly due to price stability following non-rise of excise duty and well stable disposal income. The operating profit increased by four per cent to 330.07bn/- compared to 318.33bn/- of the year before due to production and cost efficiencies. CHAPTER FOUR CONCLUSION AND RECOMMENDATIONS 4.1 Conclusion A company that declares dividend uses to portray its financial growth and stability to its shareholders. Companies which declare and pay dividends from its earnings convey a clear picture of the long term and future prospects and its performance. This is attributed by the company’s ability to pay steady dividends both on an interim basis and on a respective accounting period. The power to increase the payment of dividends on a timely basis gives a clear indication about the firm’s performance and overall grow. The Tanzanian Companies law does not compel companies to declare dividends. Most companies develop their own dividend policies adopted in their prospectus. Companies which are profitable and mature tend to pay dividends, this attracts public trust and confidence to invest in such companies with a view of obtaining profits from such investments. In Tanzania, the public has constantly preferred and opted to buy shares from companies such as Tanzania Cigarette Company Limited, Tanzania Breweries Limited and CRDB Bank Plc to mention a few. These companies have often been declaring dividends; hence attracting the public to buy shares listed in the stock exchange market. ? 4.2 Policy Recommendation The implication of this study is that dividend policy decision of listed firms is influenced by profitability, cash-flow position, growth prospects, and investment opportunities of the firms. Firms experiencing unstable earnings find it difficult to pay dividend, resulting to less or no dividend payment. The results suggest that, growing firms need more cash or capital injection to fund their orderly growth, this will enable such firm to retain a greater proportion of their earnings by paying low dividend. Firm managers should change their dividend policies to effect the share price return, this has to be done bearing other aspects, such as financing and investing decisions, before deciding whether to pay or not to pay dividend. Due to the diverse nature of the listed companies, the management of these firms should consider dividend policy as a strategic issue and not tactical, investors should choose the dividend policy that suits their investment profile. The law under the Companies Act should also seek to clearly define as to what is ‘dividend’ in relation to corporate finance as well as enact policies which shall act as guidelines for directors, managers and regulators of company business when declaring or in the payment of dividends. Such uniformity will be crucial and necessary for the growth, stability and perpetuity of corporate companies in Tanzania. ? 4.3 Recommendations for further Studies Further research is needed to examine the determinants of dividend policy for Tanzanian non-listed companies and see if a similar conclusion is reached. The study therefore recommends that additional research is necessary to scrutinize the possibility of other factors that were not included in this study such as dividend payout ratio, return on assets, cash flow per share, ratio of stock price to book value per share.

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