Factors Influencing Dividend Policy : Evidence from Electricity Sector of Pakistan

Abstract

One of the important decisions company is to decide about company’s dividend policy. The main purpose of paying dividend is that companies want to attract more investors, satisfy existing once and maintaining a good reputation. In Pakistan there are different sectors and there are different factors which influence their dividend policy. This study has used few factor of them such as tax, liquidity, profitability, market to book value, debt to equity and cash flow. Result of study states that liquidity, profitability, market to book value and cash flow have significant impact on the dividend policy of the electricity producing companies. Whereas debt to equity and tax have not a significant impact on dividend policy of the company. Results also state that cash flow, debt to equity, tax and MV to BV have positive relationship with dividend policy of companies. The factors such as profitability and liquidity have negative relationship with the dividend policy of firms in Pakistan.