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

  • Kashif Imran


    (University of Karachi, Pakistan)

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.

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Article provided by Department of International Business and Economics from the Academy of Economic Studies Bucharest in its journal Romanian Economic Journal.

Volume (Year): 14 (2011)
Issue (Month): 41 (September)
Pages: 47-60

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Handle: RePEc:rej:journl:v:14:y:2011:i:41:p:47-60
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  1. Varouj Aivazian & Laurence Booth & Sean Cleary, 2003. "Do Emerging Market Firms Follow Different Dividend Policies From U.S. Firms?," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 26(3), pages 371-387.
  2. Jensen, Gerald R. & Solberg, Donald P. & Zorn, Thomas S., 1992. "Simultaneous Determination of Insider Ownership, Debt, and Dividend Policies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(02), pages 247-263, June.
  3. M. J. Gordon, 1963. "Optimal Investment And Financing Policy," Journal of Finance, American Finance Association, vol. 18(2), pages 264-272, 05.
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