MS Banking and Finance

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Determinants of Dividend Payout Ratio and its Impact on Subsequent Earning Growth
(UMT.Lahore, 2019-07-26) Abdurehman Khan
An organization decision regarding the amount of a dividend to be paid and the level of the profit to be retained is often referred to ‘Dividend policy’. This study is conducted to examine the main determinants of dividend payout ratio. Moreover, this study also examines the association between dividend payout ratios and company’s subsequent earnings growth. The study try to see the relationship and implication the dividend payout with related variable such as firm size, cash balance, firm stability, free cash flows, financial structure, profitability and dividend yield to firm’s future earnings. The sample involve of 51 listed non financial companies in Pakistan Stock Exchange over the period 2012 to 2018. Multiple regression models is used and found that a significant positive association between cash balance, firm stability, free cash flows, profitability and dividend payout ratio. The empirical findings also suggested a significant positive relationship between the firm’s earnings growth and dividend payout ratio. This study presents original research for dividend payout in Pakistan and implication to the company growth in the future. The result support existing literature on dividend payout and growth.