Impact of Dividend Policy on Shareholders ’ Wealth: A Study of Selected Manufacturing Industries of Pakistan

Copyright © 2014 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. ABSTRACT: This study examines the impact of dividend policy on shareholders ’ wealth in context of Pakistan. Thirty five companies randomly from three sectors; Textile, Sugar and Chemical are observed in the study. The annual data for these companies from 2006 to 2011 is used in the study. Simple OLS technique for analysis is used to derive the results of the study. The findings showed that dividend policy of the firm has significant positive impact on shareholders wealth. Similarly firm growth rate also has significant positive impact on shareholders ’ wealth. Firm size has significant positive impact on shareholders wealth; indicating that large domain of operations of a business make it more capable to exploit maximum opportunities and in position to earn greater amount of return due to greater growth prospects so it ultimately place greater value to shares of large size companies. The results of study help the corporate management to better decide the level of dividend to be distributed so that shareholders wealth could be maximized