Accelerating Company Performance through Dividend Payout Policy: A Trend Analysis of Automobile Sector Listed in Pakistan Stock Exchange

Abstract

The study explains the relationship of dividend payout policy on the business performance of companies that exist in automobile sector of Pakistan. 100 companies are selected from automobile sector. Relationship of dividend payout policy and business performance was controlled with four variables based on relevant theories. These variables include size of company, growth of company leverage debt to equity ratio and corporate governance index. Panel data is collected from 2012-2017 six years and then analyzed with unit root, descriptive statistics, correlation analysis, OLS regression, Lagrange multiplier, Huasman test, fixed effect and Random effect models. Following key findings for each research objective were obtained by applying the adopted research method on the data through the adopted method of analyses: The results showed that the automobile companies showed positive relationship between their dividend payout policy and profitability and it was concluded that both dependent and independent variables are positively related in this sector and size, growth and leverage are the controlling predictors of the relationship.