Impact Of Corporate Governance On Dividend Policy: A Case Study On Listed Manufacturing Companies Of Pakistan
Author: Zubaida Batool

This study examines the relationship between corporate governance (internal mechanisms and external mechanisms of corporate governance) and dividend policy for 100 manufacturing firms listed on Karachi Stock Exchange over the period 2003 to 2011. The panel data estimation method is used to deal with endogenity and Hausman test supports the results of the random effect model. The findings show that along with corporate governance mechanisms, firm specific factors as well as business or economic conditions have their influence on dividend policy of listed manufacturing companies listed at KSE. In this study, the positive relationship between dividend yield and corporate governance structures i.e. board composition, ownership structure, audit quality, shareholder rights etc. indicates that firms have implemented corporate governance strategies, which have resulted in higher dividend yield of the firms. The similarly positive relation between growth, profitability, earnings, and size indicate that more the Pakistani firms earn or grow more they are capable of paying dividends. The negative relation between the output gap and dividend policy indicate that as the gap between target GDP and an actual GDP of Pakistan grows, economic conditions deteriorate and Pakistani firms reduce their dividend payments. On the other hand as the higher inflation increases the nominal value of the product, so dividend payments tend to be higher during periods of high inflation. Supervisor:- Dr. Attiya Yasmin Javid

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Keywords : Corporate Governance, Dividend Policy
Supervisor: Attiya Yasmin Javid

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