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Determinants of Dividend Payout Policy: A Case of Pakistan Engineering Sector

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  • Kashif Imran

    (University of Karachi, Pakistan)

Abstract

The return on investment can be divided in capital gain and dividend payouts. It is a difficult task for management to allocate a sufficient amount in both segments, especially to prevent from agency problems. The firms pay dividends only when enough amounts have after meeting their requirements and short term needs. The purpose of the present study is to empirically investigate the factors determine the dividend payout decisions in the case of Pakistan’s engineering sector by using the data of thirty-six firms listed on Karachi Stock Exchange from the period 1996 to 2008. By employing various panel data techniques like fixed and random effects, the results suggest that the previous dividend per share, earnings per share, profitability, cash flow, sales growth, and size of the firm are the most critical factors determining dividend policy in the engineering sector of Pakistan.

Suggested Citation

  • Kashif Imran, 2011. "Determinants of Dividend Payout Policy: A Case of Pakistan Engineering Sector," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(41), pages 47-60, September.
    • Handle: RePEc:rej:journl:v:14:y:2011:i:41:p:47-60
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    References listed on IDEAS

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    Cited by:

    1. Rihanat Idowu Abdulkadir & Nur Adiana Hiau Abdullah & Wong Woei-Chyuan, 2015. "Dividend Policy Changes in The Pre-, Mid-, and Post-Financial Crisis: Evidence from The Nigerian Stock Market," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 11(2), pages 103-126.
    2. Mian Sajid Nazir & Muhammad Musarrat Nawaz, 2012. "Corporate Payout Policy and Market Capitalization: Evidence from Pakistan," Journal of Economics and Behavioral Studies, AMH International, vol. 4(6), pages 331-343.
    3. Yakubu, Ibrahim Nandom, 2019. "The Effect of Working Capital Management on Dividend Policy: An Empirical Analysis of Listed Firms in Ghana," MPRA Paper 95318, University Library of Munich, Germany.
    4. Geetanjali Pinto & Shailesh Rastogi, 2019. "Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market," JRFM, MDPI, vol. 12(3), pages 1-18, June.
    5. Mubashir Ali Khan & Fareeha Abbasi & Muhammad Azeem Ahmad & Imran Arshad, 2020. "What Determines A Dividend Policy Of Listed Non-Financial Firms Of Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(2), pages 103-121.
    6. Rehab khan & Jamshad Khurshid Meer & Rab Nawaz Lodhi & Faisal Aftab, 2017. "Determinants Of Dividend Payout Ratio: A Study Of Kse Manufacturing Firms In Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 13(1), pages 13-12.
    7. Fuad Suliman Al-Fasfus, 2020. "Impact of Free Cash Flows on Dividend Pay-Out in Jordanian Banks," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(5), pages 547-558, May.
    8. Erhan Kilincarslan, 2018. "The Factors Determining the Dividend Policy of Financial Firms Listed on the Borsa Istanbul," Bogazici Journal, Review of Social, Economic and Administrative Studies, Bogazici University, Department of Economics, vol. 32(1), pages 75-109.
    9. Rembulan Rahmadia Fitri & Muhamad Nadratuzzaman Hosen & Syafaat Muhari, 2016. "Analysis of Factors that Impact Dividend Payout Ratio on Listed Companies at Jakarta Islamic Index," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(2), pages 87-97, April.
    10. Rehab khan & Jamshad Khurshid Meer & Rab Nawaz Lodhi & Faisal Aftab, 2017. "Determinants Of Dividend Payout Ratio: A Study Of Kse Manufacturing Firms In Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 13(1), pages 12-24.
    11. Imran, Kashif & Usman, Muhammad & Nishat, Muhammad, 2013. "Banks dividend policy: Evidence from Pakistan," Economic Modelling, Elsevier, vol. 32(C), pages 88-90.
    12. Adesina Olugoke Oladipupo & Peter Okoeguale Ibadin, 2013. "Does Working Capital Management Matter in Dividend Policy Decision? Empirical Evidence from Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 4(4), pages 140-145, October.
    13. A. Olayiwola, John & M. Ajide, Folorunsho, 2019. "Do Oil Price and Institutional Quality Matter for Dividend Policy in Nigeria?," Working Papers 12, Department of Economics, University of Ilorin.

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    More about this item

    Keywords

    dividend payouts; agency problem; engineering sector;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General

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