Analyzing the Determinants of Dividend Policy: A Comprehensive Study on Ownership Structure and Cash Flow Characteristics in the Banking Sector of Pakistan

Abstract

This article comprehensively explores diverse facets of dividend policy and its determinants by synthesizing findings from various research studies. Examining seminal works such as Linter's study in 1956, this research delves into factors influencing dividend policy decisions, including existing dividend rates, changes in earnings, investment decisions, financing choices, and the impact of tax considerations. Noteworthy analyses encompass Ghosh's investigation into India's economy, highlighting the effects of past dividend policies, future prospects, leverage, and profitability. Additionally, the article delves into Hines and Hubbard's exploration of tax influences on dividend repatriation by U.S. multinational companies. Focusing on the banking sector in Pakistan, a joint model evaluates the combined effects of ownership structure and cash flow characteristics on dividend behavior, incorporating variables such as managerial ownership, individual ownership, cash flow sensitivity, size, leverage, and profitability. Descriptive analysis of data trends and averages reveals fluctuations in dividend payout and intensity over time, influenced by varying financial conditions.