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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.

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

    1. M. J. Gordon, 1963. "Optimal Investment And Financing Policy," Journal of Finance, American Finance Association, vol. 18(2), pages 264-272, May.
    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. 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.
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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. 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.
    3. Imran, Kashif & Usman, Muhammad & Nishat, Muhammad, 2013. "Banks dividend policy: Evidence from Pakistan," Economic Modelling, Elsevier, vol. 32(C), pages 88-90.
    4. 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.

    More about this item


    dividend payouts; agency problem; engineering sector;

    JEL classification:

    • G0 - Financial Economics - - General


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