2017

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Browsing 2017 by Author "Muhammad Idrees"

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    The Impact of Earnings Management on Dividend Policy: An Empirical Study of Selected Non-financial Listed Companies of Pakista
    (UMT, Lahore, 2017) Muhammad Idrees
    Studying dividend policy has become an inspiring catch all in the eyes of investors. Firms oftoday are in need of such mangers that may help them in establishing a strong dividend policy to the best interest ofthe organization as well as of stakeholders. Literature is also clear about the fact that managers are involved in establishing such dividend policies that could benefit their stakeholders. Past studies have established a link among profitability, retained earnings, size of the firm and dividend policy, but how earnings management effect an organization's dividend policy needs further attention. Therefore, this study aims at identifying the impact of earnings management on dividend policy. A set of 41 companies have been selected among non-financial listed companies of Pakistan Stock Exchange. Study period under review is from 2010 to 2015. Modified Cross-Sectional Jones Model (1995) has been applied in order to determine the discretionary accruals which is proxy of earnings management. The outcome of study with the help of random effect model is showing a negative relationship of earnings management with dividend policy and it is not significant in the determination of dividend payout of every firm. The results further strengthen the fact that an effective corporate governance mechanism has been found in the selected listed organizations. So by adding up discretionary accruals to a larger extent the dividend payment ratio will decrease rather showing an upward trend. Finally on the basis of research findings we may conclude that in order to facilitate or constrains dividend payments, earnings management does not play a pivotal role, rather managers ofthe firms have some other motives for managing accruals.