Dividend Policy And Its Impact On Shareholder's Wealth

Abstract

The proposed research work is an investigation into the relationship of dividend policy and shareholders’ wealth; it focuses on the analyses of the relationship between the firm’s Dividend Payout and its effect on share holder’s wealth. The primary aim of the management is to increase the wealth of shareholders’ which is translated into dividend payouts and stock price appreciation. The distribution policy of any company significantly affects the shareholders’ wealth by the ways returns are translated to the investors. The proposed research work was carried to investigate the influence of dividend payments on shareholders’ value in context of equity markets in Pakistan. The sample taken for the research was comprised of all the listed companies of KSE excluding only the financial sector, giving a sum total of 406 companies across all remaining sectors. The data taken for the above companies was analyzed in terms of dividend payout, size, growth ad financial leverage of the company and its effect on shareholders’ wealth. For refining the findings of the research the DPO was analyzed in terms of cash and stock dividends separately, along with the capital gains. Multiple regression model was used for examining the financial data with the help of SPSS software. The findings depicted that shareholders’ wealth is affected significantly due to DPO, DPOC and DPOS. The results also showed that growth, size and financial