Ownership Concentration, Dividend Policy and Firm Performance in Pakistan

Abstract

Data is drawing from a sample of Chemical firms listed at Karachi Stock Exchange of Pakistan over the period 2002–2017, this paper investigates the relationship between ownership concentration and dividend policy on firm financial performance. Using panel data analysis, the evidence is found to support the assumption of a significant relationship between ownership concentration and dividend policy on firm financial performance. The findings reveal that ownership concentration has a significant positive association with firm financial performance. This stated that larger shareholders can attribute to the alignment of managerial incentives with shareholder interests. They also monitor the team very effectively and efficiently. Dividend policy has a significant positive relationship with ROA. Leverage and Tangibility have a significant negative relationship with financial performance. Board size also has a significant positive impact on firm performance. These results potentially can be relevant for policymakers and academic research.

Keywords: Firm’s Performance, Ownership Concentration, Dividend Policy, Chemical Sector, Pakistan

DOI: 10.7176/RJFA/10-21-04

Publication date: November 30^th 2019