Running head: Determinants of dividend pay out ratio of companies
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Date
2016
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Publisher
University of Management and Technology
Abstract
The Cement sector has been most attractive sector in both Pakistanand India for investment prospects.The Governments of both countries are investing in different types of infrastructure facilities which will boost cement sector ultimately. The objective of this study is to find the factorswhose decide the dividend policy of cement sector of Karachi Stock Exchange (KSE)&Bombay Stock Exchange (BSE). The dividend payout ratio (Cash Dividend/Net Profit) has been used as dependent variable and leverage (Debt/Equity), liquidity (Current ratio), profitability (Net Profit), investment opportunity (retained earnings/total assets) as independent variables and size (total assets), growth (Sales growth) and tangibility (Fixed assets/total assets) as control variables.The data has been extracted from annual reports of 40 companies (17-KSE and 23-BSE)from 2009 to 2015.The regression analysis with fixed and random effect used.The results show that profitability, liquidity have positive and significant effect on dividend payout ratio and Leverage, investment opportunity have negative impact on dividend payout ratio. Size, growth and tangibility also have direct relation with dividend payout ratios. The tangibility has significant effect in KSE only whereas in BSE, it is not effecting significantly. The BSE companies are paying dividend more consistentlythan KSE Companies.
Description
Supervisor: Mr. Muhammad Mehmood Shah Khan
Keywords
MS Thesis, of Karachi stock exchange, Bombay stock exchange, Dividend payout ratio