Variance Decomposition of Dividend Policy at Three Levels

IBT Journal of Business Studies, 2017

Purpose- Motive and cause of this study is pursuing to examine the determinants of dividend payout ratios of KSE listed companies in Pakistan. Design- This study used the data of ten sectors of cement industry and these companies are listed in Karachi stock exchange, and data is drives by 2003-2012, enlarge the current research on dividend payout policy. Panel regression model used to estimate the results. Corporate profitability has always been considered as a leading independent variable of dividend payout ratio. Findings- There are multitudinal factors other than corporate profitability that influence dividend decisions of the firm like taxes, cash flow and debt to equity, sales growth. This research analyzes that profitability, tax, and cash flow have a significant relation with dividend payout ratio. And debt to equity and sales growth has insignificant relationship with dividend payout ratio. Research Limitations- This research failed to collect the data of different sectors l...

The aim of this study was to empirically examine the determinants of dividend payout policy in KSE-listed non-financial firms of Pakistan. This study also commenced to econometrically investigate the 120 sample size for the time period of 2003-2013. This study also analyzed total four explanatory variables which include: Profitability, Tangibility, Size and Growth. This study applied Pooled OLS Model for examining only the firm's particular factors that manipulate the firm's dividend payout proportion. The outcomes of this study showed that, tangibility and growth are negatively correlated towards dividend payout. But Profitability and Size is positively correlated towards dividend payout. The Profitability, Tangibility and Growth are statistically insignificant. This study also found that, their insignificancy basically affecting the dividend payout in non-financial firms of Pakistan. In the entire explanatory variables the profitability was highly insignificant. This means...

2013

The present study is an endeavour to evaluate the determinants of dividend policy. The study has been conducted on non-financial sector of Pakistan. There are five important determinants identified in this study i.e. profitability, size, tax, investment opportunities and life cycle stage of firm. A sample of 174 non-financial firms listed on Karachi Stock Exchange for the period of 2005 to 2010 has been chosen for this study. The researcher has analyzed the relationships of variables firstly for overall non-financial sector and further for sub sectors of non-financial sector. Over all sector analysis has been performed through panel data analysis. Further to check sectoral differences, sector wise regression analysis has been performed. The results have identified profitability, tax, size and investment opportunities as most influential determinants of dividend policy. However, there is a lack of stable dividend policy in the market.

2012

This paper is an effort to reveal the insight dynamics for determination of Dividend Payout with reference to Non Financial Firms listed in the KSE100 Index. In light of prior literature, key explanatory variables were identified to disclose their relationship and effect on determination of dividend payout. These variables are Earnings, Firm Size, Growth, Profitability, Corporate Tax & Financial Leverage. Through observation, 53 such companies were identified from the listed non financial firms in the Karachi Stock Exchange that have been paying out dividend consistently for the past 6 years (2005-2010). Hence, one complete business cycle has been encompassed in the study under reader’s view. These 53 companies represent 11 sectors. Multivariate Regression Analysis was identified as the most appropriate tool for econometric analysis of the data. The descriptive statistics revealed the data to be normal. Whereas when the assumptions needed to be fulfilled for OLS were tested, the dat...

Sarhad Journal of Management Sciences, 2017

Dividend decision is one of the very crucial factors that have a bearing on the long-term value of a firm. According to the traditional approach, firms that pay larger dividends happen to have escalated share prices compared to those that pay lower or no dividends. There have been previous studies conducted to explore what factors make a firm pay or ignore paying dividends for a given year. However, no consensus has been achieved so far by the researchers as to what really determines a firm"s dividend payout decision. This study is an attempt to reexamine some of the very major considerations a firm takes into account while deciding about the declaration, or otherwise, of dividends. To serve the purpose, the required financial information was obtained from "Financial Statement Analysis" of Non-financial companies published by the State Bank of Pakistan. Sixty one (61) firms were included in the sample having thorough six year financial data ranging from 2006 to 2011 which led to a total of 366 firm-year observations. Results of the study showed that out of the factors analyzed, Liquidity and Profitability had a significant association with the dividend payout policy of firms in the sample. Hence, it may be concluded that the two mentioned factors are the major determinants of a firm"s dividend policy.

2017

The objective of this research is to determine the impact of profitability, growth opportunities, risk, liquidity, firm size, leverage, taxation and audit type on dividend payout in order to increase understanding of the determinants of dividend payout within Pakistani corporate environment. To meet the objective of this research, five year financial data from 2009-2014 of listed pharmaceutical companies is used and analyzed to determine the impact of selected variables on dividend payout. Correlation analysis and backward multiple linear regression is applied on the data to determine the association between variables and the impact of selected independent variables on dividend payout. Findings reveal that audit type, liquidity, growth opportunities & profitability are the key determinants of dividend payout of pharmaceutical companies of PSX. 31.90% variation in dividend payout is caused by these variables. Other independent variables including taxation, risk, firm size and leverage insignificantly influence dividend payout decisions of pharmaceutical companies of PSX.

European Journal of Business and Management, 2012

The paper investigates the impact of different firm specific factors on the dividend policy of companies by selecting a sample of 18 banks listed in KSE for the period 2006-2011. The dependent variable is dividend policy where as explanatory variables include, firm size and risk, profitability, firm's growth and leverage. It was found that out of 18 banks 11 banks pay dividends whereas seven banks do not. The results have shown that the independent variables growth, profitability and firm size have positive coefficient of correlation when the dependent variable is dividend yield and Dividend Payout Ratio. However there is strong linear association between profitability and firm size with dividend policy but the variable growth rate has weak positive correlation with dividend policy. In contrast, the variables leverage and firm risk has inverse linear relationship with dividend policy. Banks that pay dividends were found, when we use method of correlation coefficient more profitable, stable and less risky as compare to banks that do not pay dividends.

International Journal of Economics and Financial Issues, 2016

Despite years of empirical research, the linkage between dividend policy and stock price volatility (SPV) remains controversial among the researchers and scholars. This research endeavors to figure out the relationship between SPV and dividend policy of listed companies in Pakistan. A sample of 50 firms, based upon consistent dividend paying behavior, listed on Karachi Stock Exchange (KSE) has been selected from non-financial sectors, for the period of 2005-2012. Multiple regressions analyses have been carried on by applying random effect model on panel data i.e., for empirical estimation and robustness, panel estimated generalized least squares methods is used for finding relationship between dividend policy (dividend payout [DP] and dividend yield [DY]) and SPV after controlling for firm size (FS), asset growth (AG), long-term debt (LD), earning volatility (EV) and earnings per share (EPS). The study has found significant negative relationship between SPV and dividend policy varia...

2015

There had been several researches and studies developed for identifying relationships between dividend policy with many other factors. These factors are searched or sometimes tested directly. Authors have continuously been engaged in different findings related to dividend policy of specific firms and specific areas. This research aimed towards finding the impact of total sales, debts and expenses on dividend payout policy of non-financial or manufacturing firms, listed in Karachi stock exchange, using past years financial data from financial statements. This research would be helpful to conclude for investors who mostly expect that those firms who have more earning pay more dividend and same thinking they keep for liabilities and expenses. Multiple Regression analysis was carried out to establish the relationship between dividend payout and all these three variables. Study shows the relation between all these variables with dividend payout and what correlation exists between them. I...

Research Journal of Finance and Accounting, 2014

This study investigates factors influencing corporate dividend policy of financial and non-financial firms on companies listed in tehran stock exchange. For this purpose, dividends payable as a variable dividend policy alternatives were considered. Empirically the research data is collected from 70 firms in the Tehran Security Exchange (TSE) during 2009-2013 using the RA software and the site of the Tehran Stock Exchange were collected. Multiple regressions technique is used for examining the stated hypotheses. The results indicate that the variable size and liquidity of the company has a significant positive impact on the dividend is payable. Therefore, it can be argued that increasing the size and liquidity of the company paying the dividends by companies to increase.