Determinants of dividend policy

Abstract

Pakistan’s capital market and economy have significant features for examining the dynamics of the dividend policy. The agency conflicts between the management and the investors of the firms are main barriers to the success of the firm. The shareholder is generally taking away all the rights and similarly has a control on the decision concerning the dividend policy. The dividends are conveying better information than any other source regarding the firm’s prospects. The aim of this research is to identify and analyze the influence of shareholder preference and dividend signaling on the dividend policy of the corporations in Pakistan. The respective study presents the analysis of top financial management beliefs by taking eighty listed corporations on Pakistani stock exchanges during 2017–2018. Pearson correlation and multiple regressions are applied on responses to explore whether there is an influence regarding the shareholder preferences and the signaling mechanism on the dividend policy of the listed firms in Pakistan. Through statistical techniques the findings proved that shareholder preferences and dividend signaling have a positive and significant relationship with the dividend policy of listed corporations. Dividend policy is the response of investor preferences and signaling aspect of dividends.