Determinants of Dividend Payout Ratio: Evidence from Karachi Stock Exchange (KSE)

This study examines the determinants of dividend payout ratio in the largest stock exchange of Pakistan i.e. Karachi Stock Exchange (KSE). The effect of Debt to equity ratio, Operating cash flow per share, profitability, market to book value ratio, current ratio and corporate tax on dividend payout ratio was analyzed for the year 2009 for 50 companies that announced dividend in 2009. Relation of debt to equity ratio, profitability, current ratio and corporate tax was found to be positive with dividend payout ratio while Operating cash flow per share and market to book value ratio has a negative relationship with dividend payout ratio. Profitability, debt to equity and market to book value ratios were found to be the significant determinants of dividend payout ratio in Pakistan.