THE FACTORS AFFECTING DIVIDEND PAY-OUT RATIO IN NON-FINANCIAL FIRMS LISTED AT KARACHI STOCK EXCHANGE

Abstract

Introduction: The financial managers had to take numerous decisions which had a great impact on the future of a firm. These decisions include financing, budgeting, controlling with a core objective to increase the firm's value and to maximize the shareholders wealth. Literature Review: The chapter examines the previously conducted researches on the topic of profitability factors affecting the dividend payout ratio. The chapter examines the literature based on finding the determinants ofdividends pay-outs in Pakistani non-financial firms listed in KSE 100 Index. In order to develop an understanding and to examine the domain of Dividends clearly the recent researches on this topic has been examined and concluded in this chapter. Research Methodology: The research design for this study is "Descriptive Research''. The aim of this research is to examine the factors which affect the dividend pay-out ratio. The sample size for this research Is Non Financial firms listed in KSE 100 index. The data for this research is collected form Secondary sources. The dependent variable ofthe research model is Dividend Payout Ratio while independent variables are Profitability, Growth, Liquidity, Tangibility, and Leverage. Findings: The data collected from the secondary sources are then tested via Regression analysis using descriptive statistics. The findings from this research indicate the positive and significant association of non-financial firms’ Profitability, Liquidity, Tangibility and Leverage with dividend payout ratio of the however,Growth opportunities have negative association withsignificant relationship. Conclusion: In conclusion, five determinants of dividend payout ratio, profitability, growth, liquidity, tangibility and leverage have been used in this research. Meanwhile, all the factors have the expected sign and statistically significant. This proves that profitable firms with good liquidity, tangibility and leverage position are more able to maintain higher payout ratio. Growth ofthe non-financial films is found to have negative association with dividend payout ratio