Abstract
The objective of the study was to explore relationship between dividend and shareholders value.
While talking of dividend it has been observed that there are two schools of thought. One
thought advocate that the rise or fall in dividend increases or decreases the value of the company
while the other is of the opinion that the dividend and company worth or value has no direct
relationship. To test the hypothesis of the study whether Pakistani listed firms support relevance
or irrelevance theory of dividend. For this purpose, secondary data was utilized through a sample
of 319 firms with paying of dividend any time during 2008-18. The results from chi square and
fixed effect model shows that there is significant positive association between dividend pay-out
ratio, negative with dividend yield, positive with dividend decision to pay or not pay dividend.
Study also check the impact of govt tenure and political affiliation impact on share value with
dividends. Study concludes that Pakistani listed firms follow the theories of dividend such
Catering, signalling, bird in hand theory, and agency theory of dividend. The current research
study intends to minimize the knowledge gap on the referred topic. The present research study
has analysed a number of observations in Pakistani context. Researchers have argued on the
impact or influence of dividend and the value of the company. They forwarded their
justifications on the basis of their varied observations. They have also argued whether dividend
can be predicted on the basis of company business. However, there is no unanimous agreement
on this issue. While studies on the established markets are available with conclusive opinion, the
observations on emerging markets like Pakistan is still under the process of some conclusive
opinion.
Abdul Hameed, Muhammad Ayub Khan Maher. (2021) Theoretical advancement and empirical evidence of Dividend policy, KASBIT Business Journal, Volume-14, Issue-1.
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