DETERMINANTS OF DIVIDEND POLICY: CASE OF THE PHARMACEUTICAL SECTOR OF PAKISTAN

The dividend payout policy is one of the most debated topics within corporate finance. Many research studies have been undertaken to examine the impact of various variables on dividend policy. The objective of the study is to analyze the impact of firm-specific factors on dividend policy in the pharmaceutical sector of Pakistan for the period of 2009 to 2014. The dividend Payout Ratio is considered a dependent variable and the size of the firm, Sales Growth, Profitability, and Leverage are independent variables. The annual data for all the relevant variables are collected from the State Bank of Pakistan. The overall strength of the model is 45% and the model is the best fit at a 1% level of significance. The results of the study confirm that there is a significant positive impact of the size of the firm and sales growth on the decision of dividend payout of companies. Whereas ROA and leverage showed a negative impact on the Dividend payout ratio