Determinants of Dividend Policy: Sectoral Analysis of Listed Non-Financial Firms in Pakistan

The study is conducted to analyze the effect of various factors (i.e. Leverage (Lvg), Profitability (Prof), Business Risk (B.R), Liquidity (Lqd), and Growth Opportunities (GO)) on dividend policy (D.P) in the sample two non-financial sectors that are, food and electrical machinery from Pakistan stock Exchange. Total 30 firms have been taken, of which 20 firms from food sector and 10 from electrical machinery sector for a period of 8 years (2009-2016) by analyzing sample firms panel data. The results for both of the sectors that is generated through E-views via estimation of fixed effect model (F.E.M), show that independent variables like Prof, Lqd and Lvg have a positive and significant association to the explained variable of the study i.e. D.P, while a contra relationship is witnessed for business risk and growth opportunity to the dependent variable. Therefore, in food sector the results are more significant than the electrical machinery sector and it can be concluded that increase in the given variables will ultimately boost the D.P to shareholders that is the most attractive factor in the eyes of the majority of the stockholders. The endeavor concludes considerable results which will help the key stakeholders particularly the Board of Directors in order to formulate and restructure their D.P backed by the considered variables of this study that will ultimately maximize the stockholders wealth as well as the organizational value of both the sample sectors of the study.