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Table of Contents
1. Introductions ..................................................................................................................... 1
2. Theoretical Framework ..................................................................................................... 5
2.1 Bird in hand Theory ................................................................................................... 5
2.2 Dividend Irrelevancy Theory ..................................................................................... 5
2.3 Agency Theory ........................................................................................................... 6
2.4 Tax effect Theory ....................................................................................................... 6
2.5 Signaling Theory ........................................................................................................ 7
2.6 Life cycle Theory ....................................................................................................... 8
2.7 Catering Theory ......................................................................................................... 8
3. Literature Review ............................................................................................................ 10
3.1 Studies in Developed Countries ............................................................................... 10
3.2 Studies in Developing Countries .............................................................................. 14
3.3 Studies in Pakistan ................................................................................................... 17
4. Research Design .............................................................................................................. 21
4.1 Population and Sample ............................................................................................. 21
4.2 Model ....................................................................................................................... 21
4.3 Measurement of variables ........................................................................................ 22
5. Results ............................................................................................................................. 25
5.1 Descriptive Analysis ................................................................................................ 25
5.2 Regression Analysis ................................................................................................. 30
5.2.1 Pooled Data ...................................................................................................... 30
5.2.2 Panel Data ......................................................................................................... 32
6. Discussion ....................................................................................................................... 35
6.1 Limitations ............................................................................................................... 35
6.2 Future Research ........................................................................................................ 35
6.3 Conclusion................................................................................................................ 36
Corporate payout policy and Market Capitalization

ii
References ............................................................................................................................... 37
7. Appendices I.................................................................................................................... 42
8. Appendices II .................................................................................................................. 60
LIST O TABLES AND FIGURES

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1. INTRODUCTIONS
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1961 after the work of Franco Modigliani and Merton H. Miller with different names and
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ten unresolved problems in the finance literature and we have not an adequate explanation
for the observed dividend behavior of the firms.
Before the Miller and Modigliani (1961), lots of empirical work has been done to on
dividend policy, and there was almost consensus among the researchers that stock price is
affected by the corporate payout policy. Graham and Dodd (1951) believe that
corporations exist onl\WRSD\GLYLGHQGV%XW00¶VZRUNRQGLYLGHQGSROLF\KDVFKDQJHG
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value is not affected by its dividend payout policy at all in perfect capital market, if
investors are rational in their behavior, and there is perfect certainty in the market.
Although, most assumptions set by MM are very difficult to meet in real world but his
work set a ground for the future researchers. After his work, lot of work has been done to
study the relationship between corporate payout policy and stock price. As a result of this
work, different types of theories are established which elaborate the relationship of
payout policy and stock Price.
According to bird in hand theory, shareholders or new investors always desire current
dividends in spite of future expectation of capital gain for minimizing the uncertainty risk
related to future cash flows. Tax effect theory argues that there are high tax rates on
dividend income as compared to capital gains. Therefore, large investors prefer capital
gains to dividend. So, stock price is not influence by corporate payout policy. Another
argument differs with previous researchers and merged with the name of Agency theory
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wealth. Managers can use retained earnings in bad project or projects with negative NPV
due to their own interests or incapability. Therefore large part of earning should be paid
as dividend so there should be less money in the hands of managers who can use this
money in non profitable projects.

2
Another theory exist in literature of corporate finance with the name of Signaling Theory
which argue that as all stockholders (e.g. managers, stock holders and potential investors)
have not equal information about the earning of the firm. In this situations management
has to pay large portion of earnings as dividends to signal the stakeholders that firm is
generating healthy profits out of its assets. According to catering theory, decision whether
to payout dividend or not should be determined by the current investors demand. They
argued that managers should provide incentives to the stock holders keeping in view their
needs and wants and should pay dividends when investors prefer those firms which pay
dividends and should keep the earnings with the firm when investors prefer capital gains
to dividends.
Lot of empirical work has been done in developed and emerging economies to find and
prove the relationship of corporate payout policy and stock price. Different Researches
has been made in Pakistan also on corporate payout policy and its relations with stock
price of the firm by Nishat & Saghir (1991), Nishat (1992), Nishat & Bilgrami (1994),
Nishat (1995), Nishat (1999), Nishat and Irfan (2001), Naeem & Nasr (2007), Nishat &
Waliullah (2009), Ahmed & Javid (2009), Nazir et al. (2010), and Imran (2011).
Although a lot of studies have beeQ FRQGXFWHG WKDW GLVFXVV WKH UHODWLRQVKLS RI ILUP¶V
payout policy with different factors, but there is no work on relationship of payout policy
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about the total worth of WKHILUPHJLIWKHVWRFNSULFHRIDILUPLVRQHFDQ¶WHVWLPDWH
the total value of the firm. Market capitalization shows total value of the corporation in
the market. As stock price fluctuate, market capitalization has to face fluctuations because
market capitalization is dependent on stock prices and calculated by multiplying stock
price with no. of shares outstanding. A huge increase or decrease in stock prices may
result in overnight changes in value of corporations. Therefore there is need to study and
monitor all the elements which may directly or indirectly affect the behavior of stock
prices. And with this, corporation has to monitor changes in market capitalization either
due to stock price movements or while changing no of shares outstanding. As there is no
study on payout policy with reference to market capitalization, Therefore, we have
selected this topic for present research. As there is no literature related to our dependent
variable, and we are using stock price as the proxy of market capitalization. So, we have
Ito revise the previous studies related to stock prices movements.

3
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policy at all in perfect capital market, Investors are rational in their behavior, and there is
perfect certainty in the market. MM made three assumptions to support his view point.
These assumptions are perfect market, rational behavior and perfect certainty. First of all,
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market where neither buyer nor seller can rule over prevailing prices by his transactions.
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and prices. Transactions of securities bear no transaction cost, brokerage fee or transfer
taxes. Capital gains, dividends, undistributed and distributed earnings have equal tax
rates. But there is no such market in tKHZRUOGWKDWFDQIXOILOO00¶VDVVXPSWLRQVDQGFDQ
be declare as perfect capital market. Because there are transfer taxes, brokerage fees and
transaction costs in all markets. There are also differences in tax rates on capital gains and
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observed that management only convey positive information about the current and future
prospects of the firms to the market, while any negative information is set aside for
maintaining good perception about the firm. Another condition of perfect capital market
is that no seller or buyer of the securities may affect the stock prices by his transaction.
But it is observed that most stock of the companies are held by large investors, (e.g.
investment institutions, wealthy people and by the people who are part of management),
these investors can affect the prices of the stocks by their transactions.
Second assumption of the dividend irrelevancy theory is about rational behavior. MM

GHVFULEH³5DWLRQDOEHKDYLRU´DVWKHEHKDYLRUZKHQSHRSOHRQO\GHVLUHDQLQFUHDVHLQWKHLU
wealth either form of cash or increase in stock value. It means that the investors only
want an increase in their wealth either through capital gains or dividend payments. But
different investors have different behavior about dividends and capital gains. Some
investors want immediate reward of their funds in the form of dividend payments while
others prefer capital gains. Therefore, it looks very much difficult to be fulfilled the
assumption of rational behavior in the real world. Third assumption of the dividend
LUUHOHYDQF\ WKHRU\ LV UHJDUGLQJ SHUIHFW FHUWDLQW\ 00 GHVFULEHG ³Perfect certainty´ DV
situation when all investors are fully assured about future earnings and investment plans
of all corporations. But there may be very few large and stable firms operating in

4
developed economies that can fulfill this assumption up to some level. But all firms of the
developed and emerging economies may not be sure about their future profits and
investment plans. Therefore this assumption could be true to some extent.
Now we would talk about Pakistan keeping in view above discussed assumptions. There
is uncertainty prevailing everywhere as per political, economic and security conditions in
Pakistan. Investors are shifting their business in foreign countries due to many reasons
like shortage of electricity and gas, security conditions e.g. a large portion of our textile
sector has been moved to Bangladesh due to bad economic conditions in Pakistan. New
investors are not coming to Pakistan due to security conditions, poor infrastructure,
corruption, bad governance etc. All investors of Pakistan are not rationDO DV SHU 00¶V
assumption; all of them do not prefer capital gains on dividend payments. There are some
small investors who needs regular stream of funds to meet their needs. There exist large
investors who can influence the ruling stock prices by their transactions. All the investors
GRQ¶W KDYH FRPSOHWH LQIRUPDWLRQ DERXW WKH ILUP¶V RSHUDWLRQV 7KHUH DUH DOVR GLIIHUHQFH
tax rates on capital gains and dividends and transactions cost, taxes also exist in capital
market of the Pakistan. Therefore, by keeping in view this discussion we can build our
hypothesis that, dividend payout policy has effect on the market capitalization of the firm
in Pakistan because assumptions made by MM are not fully met in our market.
Our Research Objective is to find either corporate payout policy may have an impact on
market capitalization or not, and if there exist some association then what is the direction
of this relation. Is market capitalization only influenced by corporate payout policy? Or
WKHUH¶UHRWKHUIDFWRUVZKLFKPD\ also affect market capitalization. To meet our research
objective, at first step, we have to go through the studies related to corporate payout
policies, stock prices movements and stock price determinants. As our main variable
market capitalization is dependent on stock prices mostly. In theoretical framework, we
will go through the theories related to payout policy and stock price movement. In next
section, we will examine empirical work done on this topic. Last section of our research
will include sample and data description, Model, variable definition, calculations on
variables by applying correlation, regression, fixed and random effect techniques and
analysis of these calculations and conclusion.

5
2. THEORETICAL FRAMEWORK
2.1 BIRD IN HAND THEORY

The founder of the bird in the hand theory was Graham and Dodd (1951) and it was
further explained by Harkavy (1953) Gordon (1959). Graham and Dodd (1951) reported
WKDW³WKHVROHSXUSRVHIRUWKHH[LVWHQFHRIWKHFRUSRUDWLRQLVWRSD\GLYLGHQGV´)LUPVZLWK
high payout policy enjoy higher stock prices. According to this theory, shareholders or
new investors always desire current dividends in spite of future expectation of capital
gain for minimizing the uncertainty risk related to future cash flows. The conventional
argument in favour of bird in hand theory is the idea that dividends payments decreases
risk because these provide cash inflows for shareholders. Shareholder can also generate
cash inflows by selling out shares in the stock market. But for doing this they have to bear
trading cost in stock market. This extra cost is saved if firms payout dividends. Besides
this, dividend payments also reduce the risk of uncertainty which is linked with future
cash flows. In terms of the discounted dividend equation of firm value, the idea is that the
UHTXLUHG UDWH RI UHWXUQ GHPDQGHG E\ LQYHVWRU¶V LQFUHDVHV ZLWK WKH SORXJK-back ratio.
Although the increased earnings retention brings about higher expected future dividend,
this additional dividend stream is more than offset by the increase in the discount rate.
This argument overlooks the fact that the risk of the firm is determined by its investment
decisions and not by how these are financed. The required rate of return is influenced by
the risk of the investments and should not change if these are financed from retained
earnings rather than from the proceeds of new equity issues.
2.2 DIVIDEND IRRELEVANCY THEORY

Dividend Irrelevancy theory was presented by Miller and Modigliani (1961), they argued
WKDWILUP¶VEDVLFHDUQLQJSRZHUDQG EXVLQHVVULVNGHWHUPLQHGLWVYDOXH$QGILUP¶VYDOXH
is not affected by its dividend payout policy at all in perfect capital market, Investors are
rational in their behavior, and there is perfect certainty in the market. MM made three
basic assumptions anG GHVFULEHV WKHP DV ³SHUIHFW FDSLWDO PDUNHW´ LV D PDUNHW ZKHUH
neither buyer nor seller can rule over prevailing prices by his transactions. Every
VWDNHKROGHU KDYH IXOO UHDFK WR DOO LQIRUPDWLRQ IUHHO\ DERXW VKDUHµV FKDUDFWHULVWLFV DQG
prices. Transactions of securities bear no transaction cost, brokerage fee or transfer taxes.
Capital gains, dividends, undistributed and distributed earnings have equal tax rates.
³5DWLRQDOEHKDYLRU´DVWKHEHKDYLRUZKHQSHRSOHRQO\GHVLUHDQLQFUHDVHLQWKHLUZHDOWK

6
either fRUPRIFDVKRULQFUHDVHLQVWRFNYDOXH$QG³3HUIHFWFHUWDLQW\´LVDVLWXDWLRQZKHQ
all investors are fully assured about future earnings and investment plans of all
FRUSRUDWLRQV ,Q VLPSOH ZRUGV ZH FDQ VD\ WKDW WKH ILUP¶V YDOXH GHSHQGV RQO\ RQ WKH
profits generated by its assets, not how those profits are split between retained earnings
and dividends. They set the assumption that managers and investor have identical
LQIRUPDWLRQDERXWIXWXUHHDUQLQJVDQGGLYLGHQGVRIWKHILUPV)LUP¶VVWRFNSULFHRUFRVWRf
capital is not affected by dividend payout policy. So, if Dividend Payout Policy has not
any significant effect, then it is irrelevant.
2.3 AGENCY THEORY

Then Jenson & Meckling (1976) presented a new theory named Agency Theory.
According to this theory, ManDJHPHQW FRXOG EH LQFDSDEOH WR PD[LPL]H VKDUHKROGHUV¶
wealth. Managers can use retained earnings in bad project or projects with negative NPV
due to their own interests or incapability. Therefore large part of earning should be paid
as dividend so there should be less money in the hands of managers who can use this
money in non profitable projects. The basic problem arises due to the separation of
control and ownership which results agency conflicts. A furtherer explanation of agency
theory was presented by Easterbrook (1984) and argued that payment of large portion of
earning can solve the issue of combined actions that tends to lead to under monitoring of
the corporations and its managers. So, Payments of dividends and subsequent raise of
external finance encourage analysis of the firm by financial intermediaries such as
investment banks, regulators of the stock exchange and investors. This monitoring
PLQLPL]HVDJHQF\FRVWVDQGUHVXOWVLQDQLQFUHDVHLQILUP¶VPDUNHWYDOXH-HQVRQ
argued that if large SRUWLRQRIHDUQLQJLVSDLGDVGLYLGHQGILUP¶VYDOXHZRXOGEHLQFUHDVHG
because there would be less free cash flow in hands of manager. And they would have no
funds available to invest in projects of their own interests.
2.4 TAX EFFECT THEORY

Miller & Scholes (1978) presented Tax Effect Theory which argues that difference of tax
rates on dividend income and capital gains make clientele. Taxable investors can be
indifferent to dividends even when the tax regime favors capital gains. Keeping in mind
following points, investors may prefer to low dividend payout to high dividend payout; i)
the tax rate on capital gains are lower as compared to dividends. Therefore Large
investors who own most stock of the firm and are in high tax brackets will always prefer

7
firms with low payout policy .ii) Capital gains taxes are payable only when stock is being
sold. By considering time value effects, a dollar of tax paid in future has a lower effective
cost than a dollar paid today. iii) There is no capital gain tax payable towards
beneficiaries if a person held the stock until his death. Investors choose firms regarding
their preference of dividends and capital gains. Individuals in low tax brackets may prefer
firms which pay high dividends. No firm can increase its value by changing its dividend
payout policy as there are many firms to satisfy all types of investors.
2.5 SIGNALING THEORY

Signaling Theory argue that as all stockholders (e.g. managers, stock holders and
potential investors) have not equal information about the earning of the firm. In this
situations management has to pay large portion of earnings as dividends to signal the
stakeholders that firm is generating healthy profits out of its assets. According to the
signaling hypothesis, announcements of dividend convey signal to the investors regarding
future profits of the firm. To hold third hypothesis, management should have some
information regarding prospects of the firm, and managers are allowed to convey this
information to market. And signal about future earnings of the firm should be true. Firms
should not convey false signal about earning of the firm by increasing dividends only. As
dividend payments would increase, it would send the signal that firm would have high
profitability in future, as a result stock price of that firm will be high. On the other side, a
decrease in dividend payment s would be consider as the low profitability in future, as a
result stock price will go down. The most work on signaling theory was done by
Bhattacharya (1979), John & Williams (1985), and they argued firm may be undervalued
when investor has to meet their liquidity needs. If investor sells their holdings at that
time, then wealth transfers to new stockholders. However, firm can cater this situation by
paying out dividends. The involvement of dissipative cost increases the credibility of the
VLJQDOLQJ WKURXJK GLYLGHQGV ,Q %KDWWDFKDU\D¶V PRGHO VLJQDOLQJ FRVW LV WKH WUDQVDFWLRQ
FRVWUHODWHGZLWKH[WHUQDOILQDQFHLQ-RKQDQG:LOOLDP¶VPRGHOWKHGLVVLSDWLYHFRVWLVWKH
tax penalty on GLYLGHQGVUHODWLYHWRFDSLWDOJDLQV,Q0LOOHUDQG5RFN¶VPRGHOWKH
dissipative signaling cost is the misrepresentation in the optimal investment decision. So,
GLYLGHQG SD\PHQW FDQ EH XVH IRU VLJQDOLQJ WKHLU SURVSHFWV E\ ILUPV :HDN ILUPV FDQ¶W
send wrong signal due to dissipative cost involved. The main criticism on signaling
theory is that why dividend announcement are use for signaling when other cheap means
like share repurchase are available.

8
2.6 LIFE CYCLE THEORY

Firms have different phases during its life cycles from introduction to growth, maturity
and decline. Firms follow different payout policies at each stage. When the firms are at
introduction stage and earning less, they are not in a position to payout dividends. At
growth stage, although firms earnings are high, but there is need of funds to invest in
growth projects. Therefore, most firms payout less. At maturity stage, when firms have
fewer or no growth opportunities and stable earnings, then firms payout most of their
earnings as divideQGV LI WKH\GRQ¶WKDYH DQ\RWKHUSURMHFWV WR LQYHVW$FFRUGLQJWR OLIH
cycle theory, firms follow different payout policy at each stage of life cycle. Dividend
paying firms tend to be mature and face low stock price volatility. Most work on this
argument was done by Lease et.al (2000) and Fama and French (2001), they argue that by
decreasing transaction costs on the sale of shares for the purpose of consumption, the
RSLQLRQ DERXW GLYLGHQG SD\PHQWV EHQHILWV FDQ EH FKDQJHG %\ ODUJH KROGLQJ RI ILUP¶V
stock by management who prefer capital gains to dividends and by introducing good
corporate governance technologies that lower the benefits of dividends in controlling the
agency problems between stockholders and managers. Grullon et al. (2002) reported that
an increase in dividend payments result in decrease of future earnings, and a decrease in
dividend payments bring an increase in future earnings. Firms increase their dividend
payments at the cost of their investment opportunities.
2.7 CATERING THEORY

According to catering theory given by Baker and Wurgler (2004), decision whether to
payout dividend or not should be determined by the current investors demand. They
argued that managers should provide incentives to the stock holders keeping in view their
needs and wants and should pay dividends when investors prefer those firms which pay
dividends and should keep the earnings with the firm when investors prefer capital gains
WR GLYLGHQGV %DNHU :XUJOHU ZURWH WKDW ³7KH HVVHQFH RI WKH FDWHULQJ WKHRU\ LV WKDW
managers give investors what they currently want. In the case of dividends, catering
implies that managers tend to initiate dividends when investors put a relatively high stock
price on dividend payers, and tend to omit dividends when investors prefer
QRQSD\HU´S.1160) There are three main ingredients of the catering theory; first, it
hypothesizes a source of ignorant demand of investor for dividend paying firms. Second,
limits on arbitrage permit this demand to influence recent share prices. Third, managers
sensibly consider the short run advantages of catering to the existing mispricing against

9
the long run costs and then make the dividend payment decision. The empirical work
regarding catering theory shows that rates of omission or initiation of dividends are
dependent upon the prevailing dividend premium. There is need to compare existing
stock prices of dividend payer firms with those firms which are not currently paying
dividends. To test these hypotheses, four share price base measures were introduced to
observe demands of investors about payers or non payer firms. The results show that non
payer firms likely to start paying dividends when there is high demand of dividends and
other firms which are paying dividends stop paying dividend at the time of low demand.
This theory is only argued that firms should pay dividend or not, it does not tell how
much dividend should pay. Once a firm start paying dividend, it is up to the management
to raise or reduce the dividends according to earnings of the firms.

10
3. LITERATURE REVIEW
Payout policy is discussed after 1950 but most work on this issue was done in developed
countries. Developing countries study this issue very late. In Pakistan, work on this issue
ZDV VWDUWHG E\ 1LVKDW DIWHU ¶V :H KDYH RYHUYLHZHG WKH ZRUN Gone on this topic
around the world. First of all, we are presenting the work performed in developed
countries, then we move to developing countries, and at the end we will see the
researches done in Pakistan.
3.1 STUDIES IN DEVELOPED COUNTRIES

Harkavy (1953) study the association between retained earnings and share price of the
firms and found that there is positive association between earnings and stock price. The
larger the portion of net earnings would be paid as dividend, the higher would be the
share price of those firms. He examined that the stock prices tend to be varying directly in
the proportion to the distribution of earnings in a given time frame. It means if there are
two stocks of similar firms, investor would pay high price for the stock of those firms
whose payout ratio is high. This proposition suggested giving the instant return to the
shareholder against the utilization of his funds. He also reported that over the years, stock
prices of those firms tend to be high, which kept the larger portion of earnings as retained
earnings. It means that the firms having more growth opportunities likely to keep greater
portion of their earning as retained earnings to finance their growth projects which
resulted in application of their stock price. But the critical factor in keeping larger portion
of earning to finance the expansion project is the proper utilization of those funds. It is
found while studying the individuals firms that only low payments of dividends could not
increase the stock prices. The rise in earning power should escort to increase in book
value of the firms in result of increase in stock price of the firm.
Gordon (1959) study the reasons that why should investor buy the stock of the certain
firm. He selected his sample firms from steel, machine tools, chemical and food industry
and made his analysis for the period of two years. He made three hypothesis; firstly to get
earnings and dividends, secondly for the dividend, and thirdly for the earnings. He apply
different regression model on the cross section data and found that stock price are
VWURQJO\DIIHFWHGE\GLYLGHQGSD\PHQWVWKDQUHWDLQHGHDUQLQJVDQGDVWRFN¶VUHTXLUHGUDWH
of return increases as the fraction of retained earnings due to uncertainty of future
earnings. Fisher (1961) examines the dividend payout relation with stock price in UK. He

11
selected his sample for the period of nine years from 1949-1957. The results show that
stock prices are widely influenced by dividend payout policy as compared to retained
earnings.
Friend and Puckett (1964) study the association between dividend and stock prices at
United States. They use per share price, dividends, and retained earnings as their study
variables. And control other factors which could affect a firm. They found little evidence
that a dollar of dividends has several times the impact on price of a dollar of retained
earnings. They also found that stock price of the firms, having no or less growth
opportunities are affected by dividend payments, but dividend payments have less or no
impact on stock price of the firms having larger growth potential. They suggested that
these results could be helpful for the managers for increasing share prices of their firms
by paying dividends if firm has less or no growth opportunities and by retaining their
earnings if their firms have high growth potentials.
Diamond (1967) studied the relationship of retained earnings and dividend with stock
price in United States. He selected 255 firms from eight different industries for the period
of two years from 1961-1962. The result shows little evidence that investor prefer
dividends to retained earnings. But investors prefer retained earnings in high growth
industries while dividends are ideal in low growth industries. Ball et al. (1979) studied the
impact of payout policy on value of the firms in Australia. They made their study for the
period of ten years from 1960-7KHUHVXOWVVKRZWKDWDILUP¶VYDOXHLVDIIHFWHGE\
dividend payout policy of the firms. Litzenberger and Ramaswamy (1982) examine that
either information effect or tax effect of dividend cause stock price movements in United
States. They made their study for the period of twenty one years from 1940 to 1960. They
found that a non linear positive relationship exists between stock return and firP¶V
dividend yields. The expected dividend yield can be predicted by the information
available to the investors.
Rozeff (1982) presented an optimal dividend payment model that increase in payout ratio
minimizes the agency cost but it enlarge the transaction cost for the firm related external
finance in United States. He used a sample of 200 companies for the period of seven
years through 1974 to 1980. He use average payout ratio, percentage of common stock
held by insiders, average growth rate of revenues, YDOXHOLQH¶VIRUHFDVWRIDYHUDJHJURZWK
rate of revenues, beta coefficient, and number of common stock holder as their study

12
variables. The results showed that there is positive association between payout ratio and
number of common stockholders and negative associations exist between payout ratio and
percentage of stock held by insiders. It means that if large stocks of the firms are held by
outside shareholder, they want higher dividend payout. It also found that firms with less
ownership dispersion and large inside ownership have less benefit of dividends to reduce
agency cost problems.
Baker et.al (1985) examined the dividend payout policy of to study its impact on stock
prices in USA. They select a sample of 562 firms from wholesale / retail, manufacturing,
and utility firms listed at New York stock exchange. They use pattern of past dividends,
anticipated future earnings, cash availability and concern regarding increasing or
maintaining price as determinants of dividend payout policy. They use mail questionnaire
to get information about dividend payout policy. They found that payout policy of the
firms have significant impact on the share price movements of the firms. Baker and
Powel (1999) collected the views of managers of different companies to find out
relationship between payout policy and share price movements in USA. They selected
603 firms from New York stock exchange for their study and found that dividend payout
policy has strong impact on share price movements. Managers took into account the
consistency in dividend payments while deciding the payout ratio of the firm.
Baskin (1989) found a significant and dominating negative relationship between dividend
yield and stock price volatility. The high degree of association between the two measures
of dividend policy caused him to drop the payout measure from his regression analysis.
Allen & Rachim (1996) examine the relationship between of dividend payout policy and
share price of the firms in Australia. They selected 173 companies from Australian stock
exchange and made his analysis for the period of fourteen years through 1972 to 1985.
They use price volatility as independent variable, dividend yield and payout ratio as
independent variables, and earning volatility, size, growth and leverage as control
variables. They imply cross sectional ordinary least squares regression technique on the
data and regress dependent variable price volatility against independent variables payout
ratio and dividend yield. The results showed that a significant negative relationship exists
between the dividend payout ratio and share price volatility and a significant positive
relationship exist among share price volatility and leverage. It means that stock price is
not affected by dividend yield while dividend payout ratio, earnings volatility, leverage,
size of the firm is major determinants of stock price. They do not found any arbitrage or

13
duration effect. On the other hand, rate of return effect proposes that payout ratio and
dividend yield both have impact on stock return volatility. The fact that dividend yield
has no significant impact does not mean that rate of return impact does not matter. The
duration effect and rate of return is expected to be associated with growth rate of the firm.
If this correlation is important, then growth rate must have significant effect on the
coefficients for the payout ratio or dividend yield when it is added to the regression.
Morgan and Thomas (1998) examine the stock returns and dividend yield to study the
relationship between dividend payout policy and stock price movements in equity market
of UK. They selected their sample for the period of nineteen years through 1975-1993.
The results show that there is positive correlation between stock returns and dividend
yield, they also found non linear correlation between dividend yield and risk adjusted
UHWXUQVZKLFKDUHDOVRDIIHFWHGE\ILUP¶VVL]H
Conroy et al. (2000) study the pricing effect of dividend and earning announcement in
Japan. They studied the firms listed on the 1st section of Tokyo stock exchange for the
SHULRG RI \HDUV IURP WR 7KH\ XVH FXUUHQW \HDU¶V HDUQLQJV FXUUHQW \HDU¶V
GLYLGHQGV DQG IRUHFDVW RI QH[W \HDU¶V HDUQLQJV DQG QH[W \HDU¶V GLYLGHQG WR WHVW SULFLQJ
impacts. They found that earnings of the firm dominate to explain stock price movements,
DQGFXUUHQW \HDU¶VGLYLGHQGKDVQRVLJQLILFDQWLPSDFWRQVKDUH SULFHVEXWIRUHFDVWDERXW
QH[W\HDU¶VGLYLGHQGKDVDVPDOOEXWVLJQLILFDQWLPSDFWRQVKDUHSULFHPRYHPHQWV
Gill et.al (2010) examine in USA. They selected 266 companies from manufacturing and
service industries of USA. They use dividend payout ratio, profitability, sales growth,
cash flow, corporate taxes, market to book value, debt to equity ratio, and industry as
their study variables. The results show that payout ratio is the function of sales growth,
profit margin, debt to equity ratio, and corporate taxes. For manufacturing firms, payout
ratio is the function of corporate taxes, profit margin and market to book value. For
services firms, payout ratio is the function of sales growth, profit margin, corporate taxes
and debt to equity ratio.
Hussainey et.al (2011) tries to find out the relationship between payout policy and
changes in stock prices in UK. They made their analysis on publically quoted companies
in London stock exchange during 1998 to 2007 for ten year time period. They took price
volatility as dependent variable, dividend yield and payout ratio as independent variable,
and earning volatility, size, long term debt, and growth in assets as control variables.

14
They apply multiple regression analysis and found that a significant negative relation
exists between dividend payout ratio and share price volatility of the firm and there is a
negative relation between dividend yield and stock price volatility. It means that a stock
price of a firm is less volatile if the payout ratio of that firm is higher. They propose the
payout ratio as the main determinant of share price volatility. Debt and size has highest
correlation with stock price volatility among control variable. There exist significant
negative relations between size and share price volatility. They also found that debt has a
significant positive relationship with share price volatility which means that if a firm is
more leveraged, its stock price would be more volatile. And there is a significant negative
relationship between the size and share price volatility which means as a firm is larger, its
share price volatility is less.
Al-Ajmi and Abo Hussain (2011) examine impacts of cash flows on payout policy of the
corporations, determinants of payout policy in Saudi Arabia. They selected fifty four
listed firms of Saudi Arabia and made their study for the period of seventeen years from
1990 -2006. Their variables include previous dividends, cash flow, profitability, leverage,
size, controlling shareholders, government ownership, life cycle and tangibility. The
UHVXOWV VKRZ WKDW IOH[LEOH SD\RXW SROLFLHV DV WKH\ GRQ¶W SD\ LQ ORVVHV DQG WU\ WR VNLS LQ
ORZSURILWV7KH\IRXQGWKDWODVW\HDU¶VGLYLGHnds, cash flows, profitability and life cycle
as determinants of payout policy. Zakat play significant role in payout decisions.
3.2 STUDIES IN DEVELOPING COUNTRIES

Naceur et al. (2006) examined the major determinants of dividend payout policy in Tunis.
They selected forty eight firms listed at Tunis stock exchange from non financial sector.
They tried to find out the consistency of dividend payment. The results showed that there
LVLQFRQVLVWHQF\LQGLYLGHQGSD\PHQWVODVW\HDU¶VGLYLGHQGSD\RXWUDWLRDQGFXUUHQW\HDU¶V
earnings are major determinants of payouts of the firms, and liquidity is negatively
correlated with dividend policy. Firms with consistent earning and high profitability tend
to pay large dividends, firms having growth opportunities pay more dividends to catch the
attention of new investors, and dividend policy is not influenced by ownership structure
due to very few agency conflicts.
Rashid and Rehman (2008) examine relationship between dividend payout policy and
stock price volatility in Bangladesh. They select one hundred and four firms from non
financial sector. They use price volatility, dividend yield, payout ratio, earning volatility,

15
growth in assets, long term debt, and size as study variable and apply cross sectional
regression analysis on the data and found that there is non-significant positive relationship
between share price volatility and dividend yield.
Anil & Kapoor (2008) study the dividend payout policy determinant in India. They study
the firms from IT from 2000 to 2006 for the period of seven years. They use dividend
payout ratio as dependent variable, and current and anticipated earnings, corporate taxes,
liquidity, growth opportunities and risk as their independent variables and apply
correlation and regression method to find out relations among these variables. The results
show that only liquidity and risk determines the dividend payout policy. it means Indian
IT firms are highly liquid, and these firms are highly profitable and can payout large
dividends. However they also rHSRUWHGWKDW³H[LVWLQJYDULDEOHVH[SODLQMXVWRI,QGLDQ
Information technology dividend Behavior.
2NSDUDH[DPLQHGWKHSD\RXWSROLF\¶VGHWHUPLQLQJIDFWRUVLQ1LJHULD+HVHOHFWHG

sample for seventeen years from 198002006. He use variables of market size, liquidity,
asset turnover, turnover ratio, inventory turnover, current ratio, return on net growth,
UHWXUQRQLQYHVWPHQWDYHUDJH(36(DUQLQJVDIWHUWD[ODVW\HDU¶VGLYLGHQGDQGODVW\HDU¶V
earnings in his study and found that dividend yield and payout are affected by current
UDWLRHDUQLQJVDQGODVW\HDU¶VGLYLGHQGV(DUQLQJVKDYHLQYHUVHDVVRFLDWLRQZLWKSD\RXW
UDWLRDVWKH\DUHUHWDLQHGIRUJURZWK/DVW\HDU¶VGLYLGHQGDQGFXUUHQWUDWLRLPSO\SRVLWLYH
effect on dividend yield and payout ratio. Firm having free cash is likely to increase
dividends.
Abor and Bokpin (2010) examine the effect of investment opportunity and corporate
finance on the payout policy in the firms of emerging markets. They selected publicly
traded firms of emerging market from thirty four countries for the period of 17 years from
1990-2006. Emerging markets of various countries include; Zimbabwe, Venezuela,
Turkey, Thailand, Taiwan, Sri Lanka, Spain, South Africa, Slovenia, Slovakia, Singapore,
Russian Federation, Portugal, Poland, Philippines, Peru, Pakistan, Morocco, Mexico,
Malaysia, South Korea, Israel, Indonesia, India, Hungary, Hong Kong, Greece, Egypt,
Czech, Columbia, China, Chile, Brazil, Argentina. They selected dividend payout as
dependent variable, and financial leverage, external finance, and debt maturity as
independent variables. They introduced profitability, Size, Inflation, GDP per capita and
risk as control variables. They applied fixed effect model on panel data and found that

16
investment opportunity is an important determinant of payout policy of the firm. And

there is a significant negative relationship between investment opportunity and dividend
payout policy. It means the firms which have higher investment potentials would pay very
low dividend because such firms have to retain their income for investments. In addition,
the results show an insignificant relation among all measures of corporate finance
(financial leverage, debt maturity, and external finance) on payout policy. It means that
decisions about payout policy can be taken independent of corporate financial policy.
Stock market capitalization and profitability have also an impact on payout policy.
Profitable firms likely to pay out large dividends. However, firms in well developed
markets seem to payout low dividend. Firms with high market capitalization payout low
dividends because it may have better growth potential and needs fund to finance this
growth.
Warne and Insan (2011) examined the relationship among earnings, ownership structure
and dividend payout policy in India. They made their analysis for the period of eight
years from 2001 to 2008 by taking data from TATA Steel Limited. They use Total
Capital, equity capital, reserves and surplus, debt, net worth, EBIT, interest EBT and
EAT as stXG\ YDULDEOHV DQGXVHGLIIHUHQW VWDWLVWLFV WHFKQLTXHV OLNH3HDUVRQ¶VFRUUHODWLRQ
and t-test to analyze the relationship among the variables. They found that there is strong
relationship between ownership structure and payout policy and conservative payout
policies are followed by the firm.
Farooq et al. (2012) examine the dividend payout policy and stock price volatility in
Morocco selecting the sample from Morocco stock exchange for the period of five years
from 2003 to 2007. The time duration was determined in such a manner that they could
evaluate the signaling value of dividend policy during the period of high and stable
growth. For this purpose, they assume 2003-2005 as constant growth period and 2006-
2007 as high growth period. They use stock price volatility, payout ratio and market
DGMXVWHG UHWXUQV DV WKHLU VWXG\ YDULDEOHV 7KH\ DOVR LQWURGXFH FRQWURO YDULDEOH RI ILUP¶V
size, asset growth, choice of auditors, operating earnings to total assets ratio and long
term debt to total assets. They use share price volatility as dependent variable and payout
ratio as independent variable, and industry dummies and year dummies in regression
equation to test their hypothesis. The results show that there is a significant negative
association between payout ratio and share price volatility and significant positive
association between payout ratio and stock returns in constant growth period. But during

17
high growth period, association between payout ratio and share price volatility and
correlation of payout policy and market adjusted returns break down, Because investor
may be paying less concentration to the signaling value of dividend during the high return
period as they are getting high returns on investments.
3.3 STUDIES IN PAKISTAN

Nishat & Irfan (2003) examined the effect of dividend payout policy on share price risk in
Pakistan. They selected 160 firms list at Karachi stock exchange for the period of twenty
years through 1981 to 2000. They use price volatility, dividend yield and payout ratio,
earning volatility, size, asset growth and leverage as study variables. They apply cross
sectional regression analysis on the data and found that dividend payout policy has
significant impact on stock price volatility. Payout ratio has significant effect at lower
level of significance. The earnings volatility effect is significant and negative. The size
effect is negative during 1981 to 1990, but it becomes positive during 1990 to 2000.
Naeem and Nasr (2007) investigated the dividend trends and its determinants in Pakistan.
They selected 108 firms (77 Non-financial and 31 financial) listed at KSE and made their
analysis for the period of six years from 1999 to 2004. The results showed that the payout
ratio of most firms in Pakistan is very low. Non financial sector payout ratio is higher as
compared to financial sectors. Leverage, liquidity and investment opportunities are
negatively correlated with dividend payouts. Firms with higher net income payout large
GLYLGHQGV DQG FXUUHQW \HDU¶V HDUQLQJV DUH PDMRU GHWHUPLQDQW RI SD\RXW SROicy. Larger
financial firms have high payout ratio in when they have low growth opportunities and
non financial firms have to invest more funds in fixed assets that have negative impact on
their payouts.
Ahmed & Javid (2009) examine the determinants of dividend policy in Pakistan. They
selected three hundred and twenty firms of Karachi stock exchange from non-financial
sector and made his analysis for the period of six years from 2001 through 2006. They
apply fixed effect model, random effect model, pool with common effect model and
GMM techniques for their analysis. They use dividend yield, net earnings, ownership
structure, market to book value, turnover, slack, size, sales growth, and leverage as
variables for their study. They found that firms rely on last year dividend per share and
earnings of the current year to set their dividend payout policy for the year. However,
current earning play vital role to set the dividend payout policy. They also found that

18
firms with high profitability and stable earnings have more free cash flows, therefore, pay
more earnings as dividends. Furthermore, market liquidity and ownership concentration
have positive effect on payout policy. Leverage and investment opportunities have
negative effect on payout policy. The size and market capitalization have negative effect
on payout policy.
Nazir et.al (2010) examines the determinants of stock price volatility in Pakistan. They
selected seventy three firms from KSE-100 index and made his analysis for the period of
six years from 2003-2008. They took price volatility as dependent variable, dividend
yield and payout ratio as independent variable and leverage, assets growth, earning
volatility and size as control variables. They implied fixed effect approach and random
effect approach on the panel data. The results show that there exist strong significant
association between dividend payout policy and stock price volatility in Karachi stock
exchange. Payout ratio has significant effect at lower level of significance but the impact
of dividend yield to share price volatility enlarged. The leverage and size created negative
non significant impact on share price volatility.
Akbar and Baig (2010) examine stock price reactions against dividend announcements in
Pakistan. They selected seventy nine firms from Karachi stock exchange and made their
analysis for the period of four years through 2004-2007. They study stock price
movement against cash dividend announcement, stock dividend announcement, and cash
and stock dividend announcement. They apply Wilcoxon signed rank test and t-test on the
data and found that cash dividend announcements have no significant impact on stock
price while stock dividends has positive significant impact on stock prices. And cash and
stock dividend also have positive significant impact on stock prices.
Imran (2011) try to study determinants of dividend policy in Pakistan. He selected thirty
six firms of Karachi stock exchange from engineering sector and made his analysis for the
period of twelve years from 1996 through 2008. He took dividend per share as dependent
YDULDEOHDQGH[DPLQHGLWDJDLQVWHDUQLQJVSHUVKDUHSURILWDELOLW\ILUP¶VFDVKIORZVVDOHV
growth, size and liquidity by applying different panel data techniques like fixed effect,
random effect and pooled estimation approach. He found that the most critical elements in
determining dividend payout policy are previous dividend per share, Profitability, earning
per share, sales growth, cash flows and size of the firm. He examined that per share
dividend is a positive function of the last years dividend, profitability, earning per share,

19
size of the firm and sales growth and is negatively associated with cash flows. It means if
a firm has higher sales and profitability, it has enough cash to payout cash dividend to its
shareholders. Larger firms are keener to raise cash dividend because it has more access to
various sources of finance. Management tries to increase or meet the payout ratio of last
\HDU 0DQDJHUV DUH UHOXFWDQW WR FXW WKH GLYLGHQG IURP SULRU \HDU¶V payout ratio. The
results show that there is negative association between payout and cash flows which
SURSRVH WKDW ILUPV SORXJK EDFN LWV H[WUD FDVK 7KH ILUP¶V OLTXLGLW\ LV QRW XQUHODWHG WR
payout policy in engineering sector of Pakistan.
Asghar et.al (2011) studies the effect of payout policy on share price in Pakistan. They
choose firms from sugar, chemical, cement, synthetic & fiber and engineering sector of
the economy and made their study for the period of five years from 2005 to 2009. They
use price volatility as dependent variable, and payout ratio, dividend yield, growth in
assets and earning volatility as independent variables. They use descriptive statistics,
regression and correlation techniques for their analysis. They found that dividend yield is
strongly correlated with the stock price movements while growth in assets is negatively
correlated with stock price movement. Besides, stock price movement is also affected by
other variables.
Khan et.al (2011) studies the impact of dividend decisions o stock prices at Karachi stock
exchange. They selected fifty five firms from KSE-100 index and made their analysis for
the period of ten years through 2001 to 2010. They use stock price as independent
variable, dividend yield and retention ratio as independent variable, and return on equity,
profit after tax and earnings per share as control variables, they use fixed effect model and
random effect model to elaborate the relations among variables. The results of this study
show that earnings per share, dividend yield, profit after tax and return on equity has
positive correlation with stock price, and retention is negatively correlated with stock
prices. They also consider dividend policy as signaling device about the performance of
the firms.
Asif et.al (2011) examines the impact of leverage on payout policy in Pakistan. They
choose 403 firms from Karachi stock exchange and made their analysis for seven years
for the period of 2000-2008. They dividend per share as dependent variable, debt ratio
and dividend yield as independent variables, and change in earning as dummy variable.
They apply descriptive analysis, correlation coefficient, fixed effect model, random effect

20
model techniques to find out the relationship among variables. The result show that
leverage has significant impact on dividend per share but negative effect on dividend
payouts which means highly leverage firms pay less dividends. They also found that
dividend yield has positive effect on dividend policy while there is no impact of change in
earnings on dividend payout policy.
Khan et al. (2011) examined the managerial view about payout policy in Pakistan. They
FRQGXFWWKHLQWHUYLHZVRIILUP¶VPDQDJHUVWRDQDO\]HWKHLUYLHZVDERXWSD\RXWSROLF\
The results showed that the payout policy decisions are similar to developed markets.
7KH\ DOVR IRXQG WKDW ILUP¶V OLTXLGLW\ DQG FXUUHQW \HDU¶V HDUQLQJ DUH WKH PDMRU
GHWHUPLQDQWV RI SD\RXW SROLF\ DQG FXUUHQW GLYLGHQGV DUH QRW DIIHFWHG E\ SDVW \HDU¶V
dividends
Dividend yield and payout ratio are used as the measures of corporate dividend policy.
Based upon the review of literature discussed above, our proposed hypothesis to be tested
is as follow;
H0= Dividend yield has no effect on market capitalization of the firms.
H1 = Dividend yield has significant effect on market capitalization of the firms.
H2 = Payout ratio has no effect on market capitalization of firms.

H3 = Payout ratio has significant effect on market capitalization of firms.

21
4. RESEARCH DESIGN
4.1 POPULATION AND SAMPLE

This study examines the effect of corporate payout policy on its market capitalization. For
this purpose, we have selected 68 firms from non financial sector of Pakistan listed at
KSE-100 index for the period of five years from 2006 to 2010. KSE-100 index firms
represent the 85% market share. There are 75 firms of non financial sector listed at KSE-
100 index. Out of those 75 firms, Researchers excluded seven firms from sample which
are merged or dissolve or go bankrupt or established after 2006 or delisted during our
research period. Data of our sample companies has been collected from various secondary
source i.e. Karachi Stock Exchange website, State Bank of Pakistan website, official
websites of firms, and financial statement of the firms. Explanatory variable data has been
taken IURP DQQXDO UHSRUWV RI WKH ILUPV DQG ³%DODQFH 6KHHW $QDO\VLV´ -2010)
published by State Bank of Pakistan. The yearly stock price data is taken from the website
of pakfinance.info and analysis reports of Karachi stock exchange.
4.2 MODEL
Different statistical Techniques are applied on our panel data to measure the effect of
corporate payout policy on its market capitalization. We use fixed effect and random
effect techniques for this purpose. We use following regression model to measure the
effect of dividend payout policy and market capitalization. The model is similar to that of
Nazir et al (2010), Allen and Rachim (1996), Nishat (1992), and Baskin (1989)
MC = a1 + a2DYj + a3PRj + ej
The close relation among market capitalization and dividend policy may cause some
problem as there are a number of factors that influence dividend policy. In this study,
there are number of factor which can affect Market Capitalization. We include those
factors as control variable in our model for limiting their impact.
MC = = a1 + a2DYj + a3PRj + a4LVRGj + a5Growthj + a6EPSj + a7Sizej + a8Ij + a9GDPj +

ej
Terms used in our model refers to the following;
a = Constant

22
MC = Market Capitalization
DY = Dividend Yield
PR = Payout Ratio
LVRG = Leverage
Growth = Assets growth
EPS = Earnings per share,
Size = Size
I = Interest rates
GDP = Gross Domestic Product
E = Error Term
4.3 MEASUREMENT OF VARIABLES

Researcher has selected following variables to measure the effect of corporate payout
policy on its market capitalization;
Market Capitalization (MC) has been taken as dependent variables. Market

Capitalization is being calculated by multiplying average stock price during the year with
shares outstanding of the firm. Average stock price for every year is calculated by taking
the square root of value derive by subtracting the lowest share price from highest share
price and dividing this value by the average market value of common stock.
Market Capitalization (MC) = Average stock price * no. of shares outstanding
Average stock price = {Highest stock price ± Lowest stock price / avg. (low and high)} 2
Payout Policy has been taken as independent variable, dividend yield and payout ratio of
the firm are used as the measure of corporate payout policy.
a) Payout ratio (PR) has been taken as Independent variable. It is calculated by

dividing the total cash dividend (by adding all cash dividends paid quarterly, half
yearly or interim dividends etc) distributed among stock holder during the year to
total earning of the company for current period.

23
Payout Ratio = Total cash Dividend distributed in a year / Total earning in a year
b) Dividend Yield (DY) is our independent variable. Dividend yield is calculated by

adding up all cash dividends paid quarterly, semi annually or annually and
dividing it by average market price of the shares of the firms.
Dividend Yield (DY) = sum of all cash dividends/ average market value of common stock
Following factors may also affect the stock market capitalization of the firm, so these
factors have been taken as control variable in our research.
Interest rates (I) are inversely related with stock market capitalization. As interest rates
increases in the economy, people transfer their funds to the banks and with a decrease in
interest rates, people invest in stock of the companies in hope of high yield. Six month
KIBOR is converted to annual rate for our analysis.
Gross Domestic Product (GDP) has positive relation with stock market capitalization.
As GDP increases, per capita income increases, and people have more saving to invest.
Five years GDP growth is taken for present study.
Earnings per share (EPS) if firm is earning profits, it is able to pay dividend. Baker et
al. (1985) found that an important determinant of dividend payout is the predicted level of
future earnings. Baker (1989) reported that poor earning is a major reason for not paying
dividends. DeAngelo & DeAngelo (1990) found that when some firms faces continues
losses for five years; those firms have the propensity to omit its dividends entirely. Pruitt
& Gitman (1991) found that past years and current year earnings have foremost influence
on dividend payments. Conroy et al. (2000) reported that earnings of the firms dominate
to explain share price movements in Japan. Jenson et al. (1992), Aivazian et al. (2003),
Amidu & Abor (2006) reported that there should be positive relationship between profits
and dividend payments. Net earnings per share are calculated dividing total earnings by
total shares of common stock.
Assets Growth (Growth) Bhattacharya (1979) wrote that the high growth firms are
smoother to pay their dividends to shareholders. Asset growth is calculated by subtracting
Total assets of previous year from total assets of Current year and dividing it by total
assets of Last year.
Asset Growth = (Total assets of CY ± Total assets of LY) / TA of LY

24
Leverage (LVRG) has negative effect on dividend payouts. Higgins (1972) and McCabe
(1979) found that if firm is highly leveraged, its free cash flow is more risky. Rozeff
(1982) found that highly leverage firm pay less dividends to avoid the cost of raising
external capital. Leverage is calculated dividing total debt of the firms by total asset.
Leverage = Total debt / Total Assets
Size (Size) Large firms are often more diversified in their activities and are best choice
for investors. Scott & Martin (1975) found that the size of the firm may affect its payout
policy. Baskin (1989) found that firms with a more dispersed body of shareholders may
be more disposed towards using dividend policy as a signaling device. Aivazian et.al
(2003) reported that market size is used as an alternative to the capital market access.
Firms which have more access to the market may be able to payout higher dividends. Size
LV FDOFXODWHG GLYLGLQJ WRWDO VKDUHKROGHU¶V HTXLW\ FRPPRQ VWRFN UHWDLning earning, and
reserves) by dividing outstanding shares of the firm. As there appear some negative
values, so we take square root of it and then find natural log of the size to use in
calculation.

25
5. RESULTS
5.1 DESCRIPTIVE ANALYSIS

Our descriptive analysis includes the measurement and analysis of central tendency (i.e.
by mean and median), dispersion (by maximum, minimum and standard deviation) and
distribution (by skewness and kurtosis) of data. We have calculated mean, median,
standard deviation, skewness, kurtosis, minimum and maximum of all the variables of 68
non financial companies of KSE-100 index for the period of five years through 2006-
2010.
Table 1 shows the details of all these descriptive statistics. Mean value of our dependent
variable of market capitalization (MC) is 10.5305 and median is 10.4782 with the
standard deviation of 2.0001. Minimum and maximum values of MC are 4.6952 and
15.7081 respectively. Skewness in our dependent variable is -.033 which means
frequency distribution of MC is negatively skew and. Kurtosis value is .139 which is less
than 3 that means curve of kurtosis is very peaked which is called platy kutric.
Independent variable dividend yield (DY) carries the mean value of .0451 with the
standard deviation of .0727. Minimum value is .0000, maximum value reaches to .9410,
and middle value (median) of DY is .0296. Skewness is 6.318 which show that frequency
distribution is positively skewed. And value of Kurtosis is 72.265 which is greater than 3
which means curve of kurtosis is high which is called Lepto kutric.
Mean for our independent variable Payout ratio (PR) is .4478 with the standard deviation
of .7612. Minimum and maximum value ranges from -3.0883 to 24.0161 with the median
of 7.8529. Skewness value is 6.318 which show data is positively skewed. Kurtosis is
55.338 which mean curve of kurtosis is high. Means value of our control variable size is
8.0725 with the standard deviation of 4.2321. Minimum value of the Size is -3.0883 and
maximum value is 24.0161 with the median of 10.4823. Frequency distribution is
positively skew with the value of .047. Kurtosis curve is peaked with the value of 1.110.
Control variable earnings per share have mean value of 25.3108 with the standard
deviation of 57.0489. Minimum and maximum values are -87.5179 and 531.5707
respectively with the median of 10.4823. Skewness of 5.294 shows the positively skewed
frequency distribution. Value of kurtosis is 36.448 showing high peak of the curve.
Growth has mean value of .5454 with the standard deviation of .3102. Minimum and
maximum values are -.8812 and 12.2152 respectively with the median of .1336.

26
Frequency is positively skew with the value of 10.297. And curve of kurtosis is very high
with the value of 124.211. Leverage has the mean value of .5454 with the standard
deviation of .3102. Minimum and maximum values are .0237 and 3.1482 with the median
of .5694. Skewness and Kurtosis values are 3.011 and 22.030 respectively that shows
frequency distribution is positively skewed and has high peak. GDP variable of economy
has mean value of .0510 with the standard deviation of .0184. Minimum and maximum
values range from .0200 to .0700 and the value of median is .0580. Frequency distribution
is negatively skewed with the value of -.650. Kurtosis value is -1.056 shows the flatness
of the curve. Mean value of interest rate is .1079 and value of median is .1076 with the
standard deviation of .0069. Minimum and maximum values are .0983 and .1179
respectively. Frequency distribution is positively skewed with .069 coefficient of
skewness. Kurtosis of -1.297 shows that curve of kurtosis is at peak.
We have discussed the overall descriptive statistics of the 68 companies for five years.
Now we are going to discuss the year wise descriptive statistics of each variable. We have
calculated mean, median, standard deviation, minimum, and maximum of five years from
2006 to 2010 for each variable. Table 2 gives the values of mean, median, standard
deviation, minimum, and maximum of market capitalization for five years.
Mean value of market capitalization for year 2006 is 10.0350 with standard deviation of
1.9655. Minimum and maximum values range from 5.3579 to 14.9469 respectively with
the median of 10.0350. In year 2007, mean value is 10.2489 followed by an increase of
.21 and standard deviation of 1.6355 which is less from previous year. Minimum and
maximum values are 5.3154 and 13.6686 having the median of 10.2109. Overall there is
an increase in mean and median while minimum and maximum are decreasing during
2007. Mean value during the year 2008 is 11.0623 followed by an increase of .82 and
standard deviation of 2.3203. Minimum and maximum values range from 5.2608 to
15.7081 with the median of 11.0283 which is higher than previous years. There is an
increase in values of mean and median during 2008. Year 2009 also brings an increase in
mean and median with the values of 11.1081 and 11.0283 respectively. Minimum,
maximum, and standard deviation for the year is 6.2914, 15.2307 and 1.9244. we have
seen an increase during 2006 to 2009. But in year 2010, there is decrease in all measures.
Mean value is 10.1983 which is less from previous year, Value of median is 10.1645
followed by decrease of .86, minimum and maximum values range from 4.6952 to
14.9428 and standard deviation is 1.8835 for the year. Overall there is not a very big

27
change in the values during five years, first four years was good having consistent
increase only year 5 brings a decrease in values of mean and median.
Table 3Table 3 shows the year wise descriptive statistics for dividend yield (DY). The mean
value of dividend yield is .0458 for 2007 with the median of .0294. Minimum and
maximum values range from .0000 to .9410 and standard deviation of .1150. Year 2007
brings a decrease in mean and median values. Mean value for the year is .0268 with the
standard deviation of .0269 while minimum and maximum values are .0000 and .1162
respectively with standard deviation of .0269. Mean for 2008 is .0346 is more than the
mean of 2007, but still it is less from 2006. Value of median also increases by .01.
Minimum and maximum values are .0000 to .1531, and standard deviation for the year is
.0357. 2009 followed by a good increase, mean value of .0588 and median of .0415 which
is greater than all previous years. Maximum value of dividend yield also increases to
.4669. In year 2010, the trends of increase also continue. Mean value is .0596 with the
standard deviation of .0694. Minimum and maximum values range from .0000 to .4017
with the median of .0442.
Table 4 shows the Mean value of payout ratio for year 2006 is .5219 with standard
deviation of 1.1034. Minimum and maximum values range from .0000 to 8.5596
respectively with the median of .2981. In year 2007, mean value is .3914 followed by a
decrease of .13 and standard deviation of .4665 which is less from previous year.
Minimum and maximum values are .0000 and 2.5508 having the median of .2887.
Overall there decrease in mean and median. Mean value during the year 2008 is .4417
followed by an increase of .05 and standard deviation of .7446. Minimum and maximum
values range from .0000 to 5.8329 with the median of .3191 which is higher than previous
years. There is an increase in values of mean and median during 2008. Year 2009 also
brings an increase in mean and median with the values of .4756 and .3566 respectively.
Minimum, maximum, and standard deviation for the year is -.3844, 6.4000 and .8370. We
have seen an increase during 2006 to 2009. But in year 2010, there is decrease in all
measures. Mean value is .4083 which is less from previous year, Value of median is
.3111 followed by decrease of .04, minimum and maximum values range from -.8250 to
2.2275 and standard deviation is .4800 for the year. Overall value of mean is fluctuating
during five years.

28
Table 5 shows the Mean value of size for year 2006 is 7.8227 with standard deviation of
3.9027. Minimum and maximum values range from -2.9568 to 17.0436 respectively with
the median of 7.8529. In year 2007, mean value is 7.9465 followed by an increase of .12
and standard deviation of 4.2379 which is less from previous year. Minimum and
maximum values are -2.9384 and 17.6177 having the median of 7.7016. Overall there is
an increase in mean while median is decreasing during 2007. Mean value during the year
2008 is 8.0770 followed by an increase of .13 and standard deviation of 4.2064.
Minimum and maximum values range from -2.9857 to 19.8473 with the median of 7.4536
which is less than previous years. There is an increase in values of mean and decrease in
value of median during 2008. Year 2009 also brings a decrease in mean and an increase
in median with the values of 7.9820 and 7.6253 respectively. Minimum, maximum, and
standard deviation for the year is -3.0883, 18.4683 and 4.4314. In year 2010, there is an
increase in values of all measures. Mean value is 8.5342 which is greater than previous
year, Value of median is 8.0334 followed by an increase of .41, minimum and maximum
values range from -2.9463 to 24.0161 and standard deviation is 4.9444 for the year.
Overall first three years are good having consistent increase only year 4 brings a decrease
in values of mean and median.
Table 6 shows the Mean value of earnings per share for year 2006 is 22.1912 with standard
deviation of 37.3507. Minimum and maximum values range from -6.5542 to 267.0359
respectively with the median of 11.7178. In year 2007, mean value is 25.5829 followed
by an increase and standard deviation of 51.7382. Minimum and maximum values are -
14.6888 and 300.8731 having the median of 52.2328. Overall there is an increase in mean
while median is decreasing during 2007. Mean value during the year 2008 is 27.5506
followed by an increase and standard deviation of 52.2328. Minimum and maximum
values range from -39.0540 to 496.2485 with the median of 8.5108 which is less than
previous years. There is an increase in values of mean and decrease in value of median
during 2008. Year 2009 also brings a decrease in mean and median with the values of
22.9331 and 8.5108 respectively. Minimum, maximum, and standard deviation for the
year are -39.0540, 496.2485 and 66.0125. In year 2010, there is an increase in values of
all measures. Mean value is 28.2965 which is greater than previous year, Value of median
is 10.0192 followed by an increase, minimum and maximum values range from -87.5179
to 531.5707 and standard deviation is 72.6604 for the year. Overall first three years are
good having consistent increase only year 4 brings a decrease in values of mean.

29
Table 7 shows the Mean value of assets growth for year 2006 is .3055 with standard
deviation of .3480. Minimum and maximum values range from-.0669 to 1.6897
respectively with the median of .1906. In year 2007, mean value is .1854 followed by
decrease and standard deviation of .2374. Minimum and maximum values are -.2087 and
1.3877 having the median of .1110. Overall there is a decrease in values of mean and
median during 2007. Mean value during the year 2008 is .1744 followed by a decrease
and standard deviation of .2830. Minimum and maximum values range from-.8091 to
1.1034 with the median of .1561 which is greater than previous years. There is an
increase in values of mean and decrease in value of median during 2008. Year 2009
brings an increase in mean and a decrease in median with the values of .4125 and .1164
respectively. Minimum, maximum, and standard deviation for the year are -.8812,
12.2152 and 1.5743. In year 2010, there is a decrease in values of all measures. Mean
value is .2855 which is less than previous year, Value of median is .1111 followed by a
decrease, minimum and maximum values range from -.6691 to 9.1246 and standard
deviation is 1.1127 for the year. Overall first three years are good having consistent
increase only year 4 brings a decrease in values of mean. Overall value of mean is
fluctuating during five years.
Table 8 shows the Mean value of Leverage for year 2006 is .5001 with standard deviation
of .2156. Minimum and maximum values range from .0592 to .9987 respectively with the
median of .2156. In year 2007, mean value is .5569 followed by an increase and standard
deviation of .3633. Minimum and maximum values are .737 and 2.8286 having the
median of .5894. Overall there is a decrease in values of mean and increase in value of
median during 2007. Mean value during the year 2008 is .5568 followed by a decrease
and standard deviation of .2763. Minimum and maximum values range from .0237 to
1.6500 with the median of .5981 which is greater than previous years. There is a decrease
in values of mean and increase in value of median during 2008. Year 2009 brings an
increase in mean and a decrease in median with the values of .5890 and .5938
respectively. Minimum, maximum, and standard deviation for the year are .0782, 3.1482
and .3981. In year 2010, there is a decrease in values of all measures. Mean value is .5240
which is less than previous year, Value of median is .5398 followed by a decrease, and
minimum and maximum values range from .0913 to 1.1883 and standard deviation is
.2626 for the year. Overall mean value shows fluctuation during the five years.

30
Table 9 shows the mean and median of economy variable GDP for year 2006 which is
.0660. In 2007 there is an increase in mean value .0700 which shows a GDP growth. But
this GDP growth could not continue and fall to .0580 in 2008 and .0200 in 2009. In 2010
there is an increase in mean value .0410. Values of mean, median, minimum and
maximum remain the same over the five year. Table 10 shows a consistent increase in the
interest rates in the economy. Mean value of 2006 is .0983 that increases to .1028 in
2007. This value increases by .1076, .1126 and .1179 in 2008, 2009, and 2010
respectively. All the values are same during the yea
5.2 REGRESSION ANALYSIS

We use regression techniques on pooled data and panel data of our 68 firm from non
financial sector of KE-100 index for the period of five years from 2006-2010. We regress
our dependent variable Market Capitalization (MC) against independent variables of
Payout ratio (PR) and dividend yield (DY) are independent variables. We use size, EPS,
Growth, LVRG, GDP and I as control variables. Following are the results of our
correlation and regression techniques on pooled and panel data respectively.
5.2.1 POOLED DATA

We apply correlation and regression techniques on five years average values of our
pooled data. Normality test are applied on pooled data to check its normality. We draw
QRUPDOLW\FXUYHDQG6KDSLURZLONµVQRUPDOLW\WHVWDQGILQGRXUGDWDLVQRUPDO
5.2.1.1 CORRELATION
In Table 11, we apply correlation on pooled technique of average data. We exclude GDP
and I from the table, because values of GDP and I are same for all 68 observations, as
average values of GDP and I are same in whole data, we omit these variables. DY carries
negative correlation with MC which is significant at .01 levels. PR is negatively
associated with MC having value of .254 which is significant at .05 levels. Significant
level decrease from .01 to .05 in case of PR and MC in pooled data. Size owns positive
correlation with MC having value of .435 and .05 confidence levels. EPS has negative
significant association with MC having value of .453 with .05 significant levels. EPS also
have negative correlation with Size having values of .245 at .005 levels of significance.
Growth carries negative correlation with MC having value of -.060 which is not
significant. LVRG has positive correlation with MC at .05 confidence levels. LVRG is
also inversely correlated with PR at .05 significant levels. Major change we observe in

31
our pooled technique is that we have found a significant negative relationship which leads
to reject our null hypothesis and prove that DY has significant effect on MC. PR results
also rejected our null hypothesis and prove that PR has significant effect on corporate
payout policy. Panel technique results show that corporate payout policy has significant
effect on its market capitalization. Our analysis on prove that this relationship negative
which means decrease in payout ratio leads to increase in stock prices.
5.2.1.2 REGRESSION
Table 12 shows the relationship between independent variable DY and MC is negative
having value of -10.4992 at .05 level of significant. Control variable size has positive
relationship with MC. This shows that big size firms have high market capitalization. EPS
has negative significant relationship with MC. It means decrease in earnings leads to high
market capitalization. This results show that Pakistani investors prefer capital gains as
compared to earnings. Growth has negative relationship with market capitalization which
is insignificant. LVRG carries positive significant relationship with MC that shows that
increase in debt leads to high MC because funds are used in profitable projects which
send positive signals in the market.
In table 13, we run separate regression of each independent and control variable. The
results show independent variable DY has negative correlation with MC with strong
impact. Independent variable PR also has negative and significant association with MC.
Size owns positive and significant association with MC. Growth has negative
insignificant association with MC. Growth has significant negative relationship with MC.
LVRG carries significant positive association with MC. The results are consistent with
Table 12 simple regression model.
In Table 14 we run five models, in model 1 we run dependent variable MC with

independent variable DY and PR, in model 2 we add control variable of size, in model 3
we add our 4th variable EPS, and similarly we added one variable in next model and in
model 6 we include all variables. The results of Table 14 are consistent with our previous
results.
5.2.1.3 STEP WISE REGRESSION MODEL

Table 15 is related to model summary. The adjusted value of R-square is sufficient to prove
reliability of our model. Table 16 shows that significance level of our model is high. Table

32
17 shows stepwise regression of our model. It shows PR, Size, EPS, LVRG and GDP has
significant relationship with MC. Results are almost consistent with our above discussion
as size and LVRG has positive relationship with Y and PR, EPS and GDP has negative
relationship with MC.
5.2.2 PANEL DATA

Our panel data exist on 340 observations of 68 firms for the period of five years through
2006- )LUVWO\ ZH DSSOLHG QRUPDOLW\ FXUYH DQG 6KDSLUR ZLON¶V WHVW WHFKQLTXHV WR
check the normality of data and found that our data is normal. Now we apply correlation
and regression techniques of fixed and random effect model to measure the relationships
among our variables.
5.2.2.1 CORRELATION
Table 18 VKRZVWKH&RUUHODWLRQDPRQJDOOYDULDEOHVUHODWHGWRRXUVWXG\'<¶V&RUUHODWLRQ
with MC is negative having value of -.050, but it is insignificant which support our null
hypothesis (H0) and prove that dividend yield has no effect on corporate payout policies.
PR has significant negative correlation with MC having value of -.141 with 99%
confidence level which reject our null Hypothesis (H3) and prove that Payout ratio has
significant impact on market capitalizations of the companies.
DY and PR as measures of Payout Policy have multicollinarity problem with having

positive value of .669 which is significant at 99% level of confidence. We have multi
collinarity diagnose test and found that multicollinarity between DY and PR does not
create some problem. Therefore we ignored this issue. Our control variable Size is
positively correlated with MC having 99% confidence level. Its value is .390. Size of the
firms has strong impact on market Capitalization. EPS carries negative significant
correlation with MC having -.361 value. EPS has also significant negative correlation
with Size carrying value of _.206 at .01 significant leYHOV *URZWK GRHVQ¶W KDYH
significant relation with MC. LVRG carries .186 value proving positive relation having
99% confidence level. LVRG also own significant correlation with PR and Size having
values of -.118 and -.115 respectively. GDP holds positive correlation with MC having
value of -.129 at 95% confidence level. But GDP has significant negative correlation with
'<,QWHUHVWUDWHVGRQ¶WKDYHDQ\UHODWLRQVKLSZLWK0&EXWLWFDUULHVVLJQLILFDQWSRVLWLYH
correlation with DY and significant negative correlation with GDP. GDP and Interest
have multicollinarity issue with the value of -.766 which is greater than .5. By applying

33
multicollinarity diagnose test, we found that multicollinarity between GDP and I creates
serious problem. Therefore, we run separate regression models using GDP and I.
5.2.2.2 FIXED EFFECT MODEL AND RANDOM EFFECT MODEL

We use fixed and random effect models of regression on panel data. GDP and I have
serious multicollinarity issues, so we have run two models to mitigate this problem. In
Table 19, we excluded control variable I and in Table 20, we excluded control variable GDP.
:H DSSO\ +DXVHPDQ¶V WHVW RQ RXU IL[HG DQG UDQGRP HIIHFW PRGHOV ZKLFK VXSSRUW WKH
results of fixed effect model are more reliable as compared to random effect model.
Table 19 gives the results of fixed and random effect models excluding control variable of
Interest. In fixed effect, DY, Growth and GDP have inverse relationship with MC while
remaining variables show positive relationships. Values of EPS and GDP are significant.
Values of DY, PR, Size, EPS, Growth, LVRG, and GDP are -.848, .011, .025, .004, -.025,
.049 and -14.398 respectively. In random effect model, DY, PR, EPS, Growth, and GDP
have negative relationship with MC while values of Size and LVRG are positively related
with MC. In random effect model, size and GDP has significant values. Values of DY,
PR, Size, EPS, Growth, LVRG, and GDP are -1.147, -.017, .121, -.002, -.004, .291, and -
13.781 respectively.
Table 20 gives the results of fixed and random effect models excluding control variable of
GDP. In fixed effect, PR, DY and Growth have inverse relationship with MC while
remaining variables show positive relationships. Values of EPS and I are significant.
Values of DY, PR, Size, EPS, Growth, LVRG, and I are -.266, - .015, .018, .003, -.003,
.107 and 21.675 respectively. In random effect model, DY, PR and EPS have negative
relationship with MC while values of Size, Growth, LVRG and I are positively related
with MC. In random effect model, size and I has significant values. Values of DY, PR,
Size, EPS, Growth, LVRG, and GDP are -.586, -.044, .120, -.002, .016, .355 and 19.568
respectively. Overall results are consistent with over above findings but there is
difference of significant level.
:HDSSO\+DXVHPDQ¶VWHVWZKLFK shows that results of fixed effect model are reliable as

compared to random effect model.
Table 21, we used eight models, in all models, dependent variable MC is run with each
variable separately excluding all other variables. Model 1 suggests that DY has

34
significant negative relationship with MC. According to model 2, PR carries negative

relationship with MC. Other variables of size, LVRG and I has positive relation with MC
while EPS, Growth and GDP are negatively associated with MC. All relationships are
significant at 99% level of confidence.
5.2.2.3 STEPWISE SIMPLE REGRESSION ON PANEL DATA

Table 22 gives model summary in panel data. The adjusted value of R-square is sufficient
to prove reliability of our model. Table 23 shows that significance level of our model is
high. Table 24 shows stepwise regression of our model. It shows PR, Size, EPS, LVRG
and GDP has significant relationship with MC. Results are almost consistent with our
above discussion as size and LVRG has positive relationship with Y and PR, EPS and
GDP has negative relationship with MC. Pooled and panel data shows similar results of
our model.

35
6. DISCUSSION
6.1 LIMITATIONS
Present study is a systematic effort to address the research problems. But certain
limitations remained as we can use the data for only 68 firms listed at KSE-100 index
from non financial sectors of the economy for a short period of 5 years from 2006 to
2010.
x Our research relies only on empirical procedures as in the corporate finance

literature rather than construction of theoretical proof on payout policy and market
capitalization.
x This study does not focus on practical applicability of the results as our intention
is not to generate policy oriented findings for operational purposes.
x Due to limited to time frame and resources, Researcher cannot work on a wider
scale with large sample size. Therefore, although results are reliable for emerging
markets like Pakistan but these are not strong enough for wider generalization.
6.2 FUTURE RESEARCH

&RUSRUDWH SD\RXW SROLF\ KDV EHHQ VWXGLHG VLQFH ¶V ZLWK GLIIHUHQW DVVXPSWLRQV DQG
variables. It is also among the top ten unresolved issues in the corporate finance.
Although many studies has been conducted regarding payout policies and stock prices
reactions. But the relationship of corporate payout policy with market capitalization is
studied first time in Pakistan as we could not found any document regarding this topic.
We use small sample size with only 5 \HDU¶V observations due to lack of time and
resources. Future researches may increase sample size and time duration of the study to
get more accurate results and generalization of the study.

36
6.3 CONCLUSION
Present study examine the relationship between corporate payout policy and market
capitalization using sample of 68 firms from non financial sector listed at KSE-100 index
over the period of five years through 2006-2010. We use Market Capitalization as
dependent variable, Dividend Yield and Payout ratio as independent variable, We apply
GLIIHUHQW VWDWLVWLFDO RI FRUUHODWLRQ DQG UHJUHVVLRQ OLNH 3HDUVRQ¶V FRUUHODWLRQ VLPSOH
regression model, fixed effect model and random effect model on pooled and panel data
to find the relationship between corporate payout policy and market capitalization. The
empirical results suggest that corporate payout policy has relationship with market
capitalization. Pooled data results show that measures of corporate payout policy has
strong negative relationship with market capitalization. It means that as dividend yield
decrease market capitalization of the corporations increases, which draws the conclusion
that investor prefer capital gains in Pakistan. Large corporations have high market
capitalization. Corporation that uses more debt has high market capitalization. Low
earnings per share leads to high market capitalization that shows funds of the companies
are invested in profitable projects which sends positive signal in the market, these positive
signals result in high market capitalization. Overall results prove that corporate payout
policy has significant impact of market capitalizations of the firms in Pakistan Results are
consistent with previous studies and

37
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ŝĂŵŽŶĚ͕:͘:͘;ϭϵϲϳͿ͘ĂƌŶŝŶŐƐŝƐƚƌŝďƵƚŝŽŶĂŶĚƚŚĞsĂůƵĂƚŝŽŶŽĨƚŚĞƐŚĂƌĞƐ͗^ŽŵĞ
ZĞĐĞŶƚǀŝĚĞŶĐĞ͘:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐŝĂůĂŶĚYƵĂŶƚŝƚĂƚŝǀĞŶĂůǇƐŝƐ;ϮͿ͕ϭϱͲϯϬ͘
ĂƐƚĞƌďƌŽŽŬ͕&͘,͘;ϭϵϴϰͿ͘dǁŽŐĞŶĐǇͲŽƐƚǆƉůĂŶĂƚŝŽŶƐŽĨŝǀŝĚĞŶĚƐ͘dŚĞŵĞƌŝĐĂŶ
ĐŽŶŽŵŝĐZĞǀŝĞǁ͕ϳϰ;ϰͿ͕ϲϱϱϬͲϲϱϵ͘
&ĂŵĂ͕͘&͕͘Θ&ƌĞŶĐŚ͕<͘Z͘;ϮϬϬϭͿ͘ŝƐĂƉƉĞĂƌŝŶŐĚŝǀŝĚĞŶĚƐ͗ĐŚĂŶŐŝŶŐĨŝƌŵĐŚĂƌĂĐƚĞƌŝƐƚŝĐƐ
ŽƌůŽǁĞƌƉƌŽƉĞŶƐŝƚǇƚŽƉĂǇ͍:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐŝĂůĐŽŶŽŵŝĐƐ͕ϲϬ͕ϯͲϰϯ͘
&ĂƌŽŽƋ͕K͕͘^ĂŽƵĚ͕^͕͘ΘŐŶĂŽƵ͕^͘;ϮϬϭϮͿ͘ŝǀŝĚĞŶĚWŽůŝĐǇĂƐĂ^ŝŐŶĂůŝŶŐDĞĐŚĂŶŝƐŵ
ƵŶĚĞƌŝĨĨĞƌĞŶƚDĂƌŬĞƚŽŶĚŝƚŝŽŶƐ͗ǀŝĚĞŶĐĞĨƌŽŵƚŚĞĂƐĂďůĂŶĐĂ^ƚŽĐŬǆĐŚĂŶŐĞ͘
/ŶƚĞƌŶĂƚŝŽŶĂůZĞƐĞĂƌĐŚ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞĂŶĚĐŽŶŽŵŝĐƐ;ϴϯͿ͕ϭϴϳͲϭϵϴ͘
&ŝƐŚĞƌ͕'͘Z͘;ϭϵϲϭͿ͘^ŽŵĞĨĂĐƚŽƌƐŝŶĨůƵĞŶĐŝŶŐƐŚĂƌĞƉƌŝĐĞƐ͘dŚĞĐŽŶŽŵŝĐ:ŽƵƌŶĂů͕ϳϭ
;ϮϴϭͿ͕ϭϮϭͲϭϰϭ͘
&ƌŝĞŶĚ͕/͕͘ΘWƵĐŬĞƚƚ͕D͘;ϭϵϲϰͿ͘ŝǀŝĚĞŶĚĂŶĚ^ƚŽĐŬWƌŝĐĞƐ͘dŚĞŵĞƌŝĐĂŶĐŽŶŽŵŝĐ
ZĞǀŝĞǁ͕ϱϰ;ϱͿ͕ϲϱϲͲϲϴϮ͘
'ŝůů͕͕͘ŝŐĞƌ͕E͕͘ΘdŝďƌĞǁĂůĂ͕Z͘;ϮϬϭϬͿ͘ĞƚĞƌŵŝŶĂŶƚƐŽĨŝǀŝĚĞŶĚWĂǇŽƵƚZĂƚŝŽƐ͗
ǀŝĚĞŶĐĞĨƌŽŵhŶŝƚĞĚ^ƚĂƚĞƐ͘dŚĞKƉĞŶƵƐŝŶĞƐƐ:ŽƵƌŶĂů͕ϯ͕ϴͲϭϰ͘
'ŽƌĚŽŶ͕D͘:͘;ϭϵϱϵͿ͘ŝǀŝĚĞŶĚƐ͕ĂƌŶŝŶŐƐ͕ĂŶĚ^ƚŽĐŬƉƌŝĐĞƐ͘dŚĞZĞǀŝĞǁŽĨĐŽŶŽŵŝĐƐ
ĂŶĚ^ƚĂƚŝƐƚŝĐƐ͕ϰϭ;ϮͿ͕ϵϵͲϭϬϱ͘
'ŽƌĚŽŶ͕D͘;ϭϵϲϯͿ͘KƉƚŝŵĂů/ŶǀĞƐƚŵĞŶƚĂŶĚ&ŝŶĂŶĐŝŶŐWŽůŝĐǇ͘dŚĞ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞ͕ϭϴ
;ϮͿ͕ϮϲϰͲϮϳϮ͘

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'ƌĂŚĂŵ͕͕͘ΘŽĚĚ͕͘>͘;ϭϵϱϭͿ͘^ĞĐƵƌŝƚǇŶĂůǇƐŝƐ͗WƌŝŶĐŝƉůĞƐĂŶĚdĞĐŚŶŝƋƵĞƐ;ϯĞĚ͘Ϳ͘
EĞǁzŽƌŬ͗DĐ'ƌĂǁ,ŝůů͘
'ƌƵůůŽŶ͕'͕͘DŝĐŚĂĞůǇ͕Z͕͘Θ^ǁĂŵŝŶĂƚŚĂŶ͕͘;ϮϬϬϮͿ͘ƌĞĚŝǀŝĚĞŶĚĐŚĂŶŐĞƐĂƐŝŐŶŽĨ
DĂƚƵƌŝƚǇ͍:ŽƵƌŶĂůŽĨƵƐŝŶĞƐƐ͕ϳϱ;ϯͿ͕ϯϴϳͲϰϮϰ͘
,ĂƌŬĂǀǇ͕K͘;ϭϵϱϯͿ͘dŚĞZĞůĂƚŝŽŶĞƚǁĞĞŶZĞƚĂŝŶĞĚĂƌŶŝŶŐƐĂŶĚŽŵŵŽŶ^ƚŽĐŬWƌŝĐĞƐ
ĨŽƌ>ĂƌŐĞ͕>ŝƐƚĞĚŽƌƉŽƌĂƚŝŽŶƐ͘dŚĞ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞ͕ϴ;ϯͿ͕ϮϴϯͲϮϵϳ͘
,ƵƐƐĂŝŶĞǇ͕<͕͘DŐďĂŵĞ͕͘K͕͘ΘDŐďĂŵĞ͕͘D͘;ϮϬϭϭͿ͘ŝǀŝĚĞŶĚƉŽůŝĐǇĂŶĚƐŚĂƌĞƉƌŝĐĞ
ǀŽůĂƚŝůŝƚǇ͗h<ĞǀŝĚĞŶĐĞ͘dŚĞ:ŽƵƌŶĂůŽĨZŝƐŬ&ŝŶĂŶĐĞ͕ϭϮ;ϭͿ͕ϱϳͲϲϴ͘
/ŵƌĂŶ͕<͘;ϮϬϭϭͿ͘ĞƚĞƌŵŝŶĂŶƚƐŽĨŝǀŝĚĞŶĚWĂǇŽƵƚWŽůŝĐǇ͗ĂƐĞŽĨWĂŬŝƐƚĂŶŶŐŝŶĞĞƌŝŶŐ
^ĞĐƚŽƌ͘dŚĞZŽŵĂŶŝĂŶĐŽŶŽŵŝĐ:ŽƵƌŶĂů͕y/s;ϰϭͿ͕ϰϳͲϲϬ͘
:ĞŶƐŽŶ͕'ĞƌĂůĚ͕Z͕͘ŽŶĂůĚ͕W͘^͕͘ΘdŚŽŵĂƐ͕^͘͘;ϭϵϵϮͿ͘^ŝŵƵůƚĂŶĞŽƵƐĞƚĞƌŵŝŶĂƚŝŽŶŽĨ
/ŶƐŝĚĞƌKǁŶĞƌƐŚŝƉ͕Ğďƚ͕ĂŶĚŝǀŝĚĞŶĚWŽůŝĐŝĞƐ͘:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐŝĂůĂŶĚYƵĂŶƚŝƚĂƚŝǀĞ
ŶĂůǇƐŝƐ͕Ϯϳ͕ϮϲϯͲϮϳϰ͘
:ĞŶƐŽŶ͕D͘͘;ϭϵϴϲͿ͘ŐĞŶĐǇŽƐƚƐŽĨ&ƌĞĞĂƐŚ&ůŽǁ͕ŽƌƉŽƌĂƚĞ&ŝŶĂŶĐĞ͕ĂŶĚdĂŬĞŽǀĞƌƐ͘
dŚĞŵĞƌŝĐĂŶĐŽŶŽŵŝĐZĞǀŝĞǁ͕ϳϲ;ϮͿ͕ϯϮϯͲϯϮϵ͘
:ĞŶƐŽŶ͕D͕͘͘ΘDĞĐŬůŝŶŐ͕t͘,͘;ϭϵϳϲͿ͘dŚĞŽƌǇŽĨƚŚĞ&ŝƌŵ͗DĂŶĂŐĞƌŝĂůĞŚĂǀŝŽƌ͕
ŐĞŶĐǇŽƐƚƐĂŶĚKǁŶĞƌƐŚŝƉ^ƚƌƵĐƚƵƌĞ͘:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐŝĂůĐŽŶŽŵŝĐƐ͕ϯ;ϰͿ͕ϯϬϱͲϯϲϬ͘
:ŽŚŶ͕<͕͘ΘtŝůůŝĂŵƐ͕:͘;ϭϵϴϱͿ͘ŝǀŝĚĞŶĚƐ͕ŝůƵƚŝŽŶ͕ĂŶĚdĂǆĞƐ͗^ŝŐŶĂůůŝŶŐƋƵŝůŝďƌŝƵŵ͘
dŚĞ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞ͕ϰϬ;ϰͿ͕ϭϬϱϯͲϭϬϳϬ͘
<ŚĂŶ͕<͘/͕͘Ăŵŝƌ͕D͕͘YĂǇǇƵŵ͕͕͘EĂƐŝƌ͕͕͘Θ<ŚĂŶ͕D͘/͘;ϮϬϭϭͿ͘ĂŶŝǀŝĚĞŶĚĞĐŝƐŝŽŶƐ
ĨĨĞĐƚƚŚĞ^ƚŽĐŬWƌŝĐĞƐ͗ĂƐĞŽĨŝǀŝĚĞŶĚWĂǇŝŶŐŽŵƉĂŶŝĞƐŽĨ<^͘/ŶƚĞƌŶĂƚŝŽŶĂů
ZĞƐĞĂƌĐŚ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞĂŶĚĐŽŶŽŵŝĐƐ;ϳϲͿ͕ϲϳͲϳϰ͘
<ŚĂŶ͕E͘h͕͘ƵƌƚŽŶ͕͘D͕͘ΘWŽǁĞƌ͕͘D͘;ϮϬϭϭͿ͘DĂŶĂŐĞƌŝĂůǀŝĞǁƐĂďŽƵƚĚŝǀŝĚĞŶĚ
ƉŽůŝĐǇŝŶWĂŬŝƐƚĂŶ͘DĂŶĂŐĞƌŝĂů&ŝŶĂŶĐĞ͕ϯϳ;ϭϬͿ͕ϵϱϯͲϵϳϬ͘
>ĞĂƐĞ͕Z͕͘:ŽŚŶ͕<͕͘<ĂůĂǇ͕͕͘>ŽĞǁĞŶƐƚĞŝŶ͕h͕͘Θ^ĂƌŝŐ͕K͘;ϮϬϬϬͿ͘ŝǀŝĚĞŶĚWŽůŝĐǇ͗/ƚƐ
/ŵƉĂĐƚŽŶ&ŝƌŵsĂůƵĞ͘,ĂƌǀĂƌĚƵƐŝŶĞƐƐ^ĐŚŽŽůWƌĞƐƐŽƐƚŽŶ͕D͘
>ŝŶƚŶĞƌ͕:͘;ϭϵϱϲͿ͘ŝƐƚƌŝďƵƚŝŽŶŽĨ/ŶĐŽŵĞƐŽĨŽƌƉŽƌĂƚŝŽŶƐŵŽŶŐŝǀŝĚĞŶƐ͕ZĞƚĂŝŶĞĚ
ĂƌŶŝŶŐƐ͕ĂŶĚdĂǆĞƐ͘dŚĞŵĞƌŝĐĂŶĐŽŶŽŵŝĐZĞǀŝĞǁ͕ϰϲ;ϮͿ͕ϵϳͲϭϭϯ͘
>ŝŶƚŶĞƌ͕:͘;ϭϵϲϮͿ͘ŝǀŝĚĞŶĚƐ͕ĂƌŶŝŶŐƐ͕>ĞǀĞƌĂŐĞ͕^ƚŽĐŬWƌŝĐĞƐĂŶĚƚŚĞ^ƵƉƉůǇŽĨĂƉŝƚĂůƚŽ
ŽƌƉŽƌĂƚŝŽŶƐ͘ZĞǀŝĞǁŽĨĐŽŶŽŵŝĐƐĂŶĚ^ƚĂƚŝƐƚŝĐƐ͕ϲϰ;ϯͿ͕ϮϰϯͲϮϲϵ͘
>ŝƚǌĞŶďĞƌŐĞƌ͕Z͘,͕͘ΘZĂŵĂƐǁĂŵǇ͘;ϭϵϴϮͿ͘dŚĞĨĨĞĐƚƐŽĨŝǀŝĚĞŶĚƐŽŶŽŵŵŽŶ^ƚŽĐŬ
WƌŝĐĞƐdĂǆĨĨĞĐƚƐŽƌ/ŶĨŽƌŵĂƚŝŽŶĨĨĞĐƚƐ͍dŚĞ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞ͕ϯϳ;ϮͿ͕ϰϮϵͲϰϰϯ͘

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DŝůůĞƌ͕D͘,͕͘ΘDŽĚŝŐůŝĂŶŝ͕&͘;ϭϵϲϭͿ͘ŝǀŝĚĞŶĚWŽůŝĐǇ͕'ƌŽǁƚŚ͕ĂŶĚƚŚĞsĂůƵĂƚŝŽŶŽĨ
^ŚĂƌĞƐ͘dŚĞ:ŽƵƌŶĂůŽĨƵƐŝŶĞƐƐ͕ϯϰ;ϰͿ͕ϰϭϭͲϰϯϯ͘
DŝůůĞƌ͕D͘,͕͘ΘZŽĐŬ͕<͘;ϭϵϴϱͿ͘ŝǀŝĚĞŶĚWŽůŝĐǇhŶĚĞƌƐǇŵŵĞƚƌŝĐ/ŶĨŽƌŵĂƚŝŽŶ͘:ŽƵƌŶĂů
ŽĨ&ŝŶĂŶĐĞ͕ϰϬ͕ϭϬϯϭͲϭϬϱϭ͘
DŝůůĞƌ͕D͘,͕͘Θ^ĐŚŽůĞƐ͕D͘^͘;ϭϵϳϴͿ͘ŝǀŝĚĞŶĚĂŶĚdĂǆĞƐ͘:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐŝĂůĐŽŶŽŵŝĐƐ
͕ϲ͕ϯϯϯͲϯϲϰ͘
DŝƚƚŽŶ͕d͘;ϮϬϬϮͿ͘ƌŽƐƐͲ&ŝƌŵŶĂůǇƐŝƐŽĨƚŚĞ/ŵƉĂĐƚŽĨŽƌƉŽƌĂƚĞ'ŽǀĞƌŶĂŶĐĞŽŶƚŚĞ
ĂƐƚƐŝĂŶ&ŝŶĂŶĐŝĂůƌŝƐŝƐ͘:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐŝĂůĐŽŶŽŵŝĐƐ͕ϲϰ;ϮͿ͕ϮϭϱͲϮϰϭ͘
DŽƌŐĂŶ͕'͕͘ΘdŚŽŵĂƐ͕^͘;ϭϵϵϴͿ͘dĂǆĞƐ͕ĚŝǀŝĚĞŶĚǇŝĞůĚƐĂŶĚƌĞƚƵƌŶƐŝŶƚŚĞh<ĞƋƵŝƚǇ
ŵĂƌŬĞƚ͘:ŽƵƌŶĂůŽĨĂŶŬŝŶŐΘ&ŝŶĂŶĐĞ͕ϮϮ͕ϰϬϱͲϰϮϯ͘
EĂĐĞƵƌ͕^͕͘͘'ŽĂŝĞĚ͕D͕͘ΘĞůĂŶĞƐ͕͘;ϮϬϬϲͿ͘KŶƚŚĞĚĞƚĞƌŵŝŶĂŶƚƐĂŶĚĚǇŶĂŵŝĐƐŽĨ
ĚŝǀŝĚĞŶĚƉŽůŝĐǇ͘/ŶƚĞƌŶĂƚŝŽŶĂůZĞǀŝĞǁŽĨ&ŝŶĂŶĐĞ͕ϲ;ϭͿ͕ϭͲϮϯ͘
EĂĞĞŵ͕^͕͘ΘEĂƐƌ͕D͘;ϮϬϬϳͿ͘ŝǀŝĚĞŶĚWŽůŝĐǇŽĨWĂŬŝƐƚĂŶŝ&ŝƌŵƐ͗dƌĞŶĚƐĂŶĚ
ĞƚĞƌŵŝŶĂŶƚƐ͘/ŶƚĞƌŶĂƚŝŽŶĂůZĞǀŝĞǁŽĨƵƐŝŶĞƐƐZĞƐĞĂƌĐŚWĂƉĞƌƐ͕ϯ;ϯͿ͕ϮϰϮͲϮϱϰ͘
EĂǌŝƌ͕D͘^͕͘EĂǁĂǌ͕D͘D͕͘ŶǁĂƌ͕t͕͘ΘŚŵĞĚ͕&͘;ϮϬϭϬͿ͘ĞƚĞƌŵŝŶĂŶƚƐŽĨ^ƚŽĐŬWƌŝĐĞ
sŽůĂƚŝůŝƚǇŝŶ<ĂƌĂĐŚŝ^ƚŽĐŬǆĐŚĂŶŐĞ͗dŚĞDĞĚŝĂƚŝŶŐZŽůĞŽĨŽƌƉŽƌĂƚĞŝǀŝĚĞŶĚWŽůŝĐǇ͘
/ŶƚĞƌŶĂƚŝŽŶĂůZĞƐĞĂƌĐŚ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞĂŶĚĐŽŶŽŵŝĐƐ;ϱϱͿ͕ϭϬϬͲϭϬϳ͘
EŝƐŚĂƚ͕D͘;ϭϵϵϱͿ͘ĞƚĞƌŵŝŶĞŶƚƐŽĨƐƚŽĐŬƉƌŝĐĞƐŝŶWĂŬŝƐƚĂŶ͘/ŶƚĞƌŶĂƚĂƚŝŽŶĂů:ŽƵƌŶĂůŽĨ
ĞǀĞůŽƉŵĞŶƚĂŶŬŝŶŐ͕ϭϯ;ϮͿ͕ϯϳͲϰϮ͘
EŝƐŚĂƚ͕D͘;ϭϵϵϮͿ͘^ŚĂƌĞWƌŝĐĞƐ͕ŝǀŝĚĞŶĚĂŶĚZĞƚĂŝŶĞĚĂƌŶŝŶŐƐĞŚĂǀŝŽƵƌŝŶWĂŬŝƐƚĂŶ
^ƚŽĐŬDĂƌŬĞƚ͘dŚĞ/ŶĚŝĂŶĐŽŶŽŵŝĐƐ:ŽƵƌŶĂů͕ϰϬ;ϮͿ͕ϱϳͲϲϱ͘
EŝƐŚĂƚ͕D͘;ϭϵϵϵͿ͘dŚĞ/ŵƉĂĐƚŽĨ/ŶƐƚŝƚƵƚŝŽŶĂůĞǀĞůŽƉŵĞŶƚŽŶ^ƚŽĐŬWƌŝĐĞƐŝŶWĂŬŝƐƚĂŶ͘
ŽĐƚŽƌĂůŝƐƐĞƌƚĂƚŝŽŶ͕ƵĐŬůĂŶĚƵƐŝŶĞƐƐ^ĐŚŽŽů͕hŶŝǀĞƌƐŝƚǇŽĨƵĐŬůĂŶĚ͘
EŝƐŚĂƚ͕D͕͘ΘŝůŐƌĂŵŝ͕E͘;ϭϵϵϰͿ͘tŚŽƉĂǇƐĚŝǀŝĚĞŶĚͲŶĞǆƉůŽƌĂƚŽƌǇĂŶĂůǇƐŝƐŽĨĨŝƌŵƐ
ůŝƐƚĞĚǁŝƚŚ<ĂƌĂĐŚŝƐƚŽĐŬŵĂƌŬĞƚ͘^ĂǀŝŶŐĂŶĚĞǀĞůŽƉŵĞŶƚ͕ϯ;ys///Ϳ͕ϯϯϱͲϯϰϯ͘
EŝƐŚĂƚ͕D͕͘Θ/ƌĨĂŶ͕͘D͘;ϮϬϬϯͿ͘ŝǀŝĚĞŶĚWŽůŝĐǇĂŶĚ^ƚŽĐŬƉƌŝĐĞsŽůĂƚŝůŝƚǇŝŶWĂŬŝƐƚĂŶ͘
WĂƉĞƌƉƌĞƐĞŶƚĞĚĂƚϭϭƚŚWĂĐŝĨŝĐĂƐŝŶ&ŝŶĂŶĐĞ͕ĐŽŶŽŵŝĐƐĂŶĚĐĐŽƵŶƚŝŶŐŽŶĨĞƌĞŶĐĞ͘
EŝƐŚĂƚ͕D͕͘Θ^ĂŐŚŝƌ͕͘;ϭϵϵϭͿ͘dŚĞ^ƚŽĐŬŵĂƌŬĞƚĂŶĚWĂŬŝƐƚĂŶĞĐŽŶŽŵǇ͘^ĂǀŝŶŐĂŶĚ
ĞǀĞůŽƉŵĞŶƚ͕Ϯ;ϭϱͿ͕ϭϯͲϭϲ͘
WƌƵŝƚƚ͕^͘t͕͘Θ'ŝƚŵĂŶ͕>͘:͘;ϭϵϵϭͿ͘dŚĞŝŶƚĞƌĂĐƚŝŽŶƐďĞƚǁĞĞŶƚŚĞŝŶǀĞƐƚŵĞŶƚ͕ĨŝŶĂŶĐŝŶŐ͕
ĂŶĚĚŝǀŝĚĞŶĚĚĞĐŝƐŝŽŶƐŽĨŵĂũŽƌh^ĨŝƌŵƐ͘dŚĞ&ŝŶĂŶĐŝĂůZĞǀŝĞǁ͕Ϯϲ;ϯͿ͕ϰϬϵͲϰϯϬ͘

41
ZĂƐŚŝĚ͕͕͘ΘZĞŚŵĂŶ͕͘͘;ϮϬϬϴͿ͘ŝǀŝĚĞŶĚWŽůŝĐǇĂŶĚ^ƚŽĐŬWƌŝĐĞsŽůĂƚŝůŝƚǇ͗ǀŝĚĞŶĐĞ
ĨƌŽŵĂŶŐůĂĚĞƐŚ͘:ŽƵƌŶĂůŽĨƉƉůŝĞĚƵƐŝŶĞƐƐĂŶĚĐŽŶŽŵŝĐƐ͕ϴ;ϰͿ͕ϳϭͲϴϬ͘
ZŽǌĞĨĨ͕D͘^͘;ϭϵϴϮͿ͘'ƌŽǁƚŚ͕ĞƚĂĂŶĚŐĞŶĐǇĐŽƐƚƐĂƐĚĞƚĞƌŵŝŶĂŶƚƐŽĨĚŝǀŝĚĞŶĚƉĂǇŽƵƚ
ƌĂƚŝŽƐ͘dŚĞ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐŝĂůZĞƐĞĂƌĐŚ͕ϯ͕ϮϰϵͲϮϱϵ͘
^ĐŽƚƚ͕͘&͕͘ΘDĂƌƚŝŶ͕:͘͘;ϭϵϳϱͿ͘/ŶĚƵƐƚĞƌǇ/ŶĨůƵĞŶĐĞƐŽŶ&ŝŶĂŶĐŝĂů^ƚƌƵĐƚƵƌĞ͘&ŝŶĂŶĐŝĂů
DĂŶĂŐĞŵĞŶƚ͕ϲϳͲϳϯ͘
^ŚůĞŝĨĞƌ͕͕͘ΘsŝƐŚŶǇ͕Z͘t͘;ϭϵϵϳͿ͘dŚĞ>ŝŵŝƚƐŽĨƌďŝƚƌĂŐĞ͘dŚĞ:ŽƵƌŶĂůŽĨ&ŝŶĂŶĐĞ͕ϱϮ
;ϭͿ͕ϯϱͲϱϱ͘
tĂƌŶĞ͕͕͘Θ/ŶƐĂŶ͕W͘;ϮϬϭϭͿ͘ĂƌŶŝŶŐƐ͕ŝǀŝĚĞŶĚĂŶĚ&ŝŶĂŶĐŝĂů>ĞǀĞƌĂŐĞ͗^ƚƵĚǇŽĨ
ddƐƚĞĞů>ƚĚ͘/ŶƚĞƌŶĂƚŝŽŶĂů:ŽƵƌŶĂůĨŽƌƵƐŝŶĞƐƐ͕^ƚƌĂƚĞŐǇΘDĂŶĂŐĞŵĞŶƚ͕ϭ;ϭͿ͕ϭͲϴ͘

42
7. APPENDICES I
Table 1 Descriptive Analysis of dependent and independent variables
Standard
Mean Median Deviation Skewness Kurtosis Minimum Maximum
MC 10.5305 10.4782 2.0001 -.033 .139 4.6952 15.7081
DY .0451 .0296 .0727 6.817 72.265 .0000 .9410
PR .4478 .3038 .7612 6.318 55.338 -.8250 8.5596
Size 8.0725 7.8529 4.2321 .047 1.110 -3.0883 24.0161
EPS 25.3108 10.4823 57.0489 5.294 36.448 -87.5179 531.5707
Growth .2727 .1336 .8905 10.297 124.211 -.8812 12.2152
LVRG .5454 .5694 .3102 3.011 22.030 .0237 3.1482
GDP .0510 .0580 .0184 -.650 -1.056 .0200 .0700
I .1079 .1076 .0069 .069 -1.297 .0983 .1179
Table 2 Descriptive Analysis of Market Capitalization
MC
Mean Median Min. Max. SD
Years 2006 10.0350 10.1242 5.3579 14.9469 1.9655
2007 10.2489 10.2109 5.3154 13.6686 1.6355
2008 11.0623 11.2401 5.2608 15.7081 2.3203
2009 11.1081 11.0283 6.2914 15.2307 1.9244
2010 10.1983 10.1645 4.6952 14.9428 1.8835

43
Table 3 Descriptive Analysis of Dividend Yield
DY
Years 2006 .0458 .0294 .0000 .9410 .1150
2007 .0268 .0232 .0000 .1162 .0269
2008 .0346 .0249 .0000 .1531 .0357
2009 .0588 .0415 .0000 .4669 .0766
2010 .0596 .0442 .0000 .4017 .0694
Table 4 Descriptive Analysis of Payout Ratio
PR
Years 2006 .5219 .2981 .0000 8.5596 1.1034
2007 .3914 .2887 .0000 2.5508 .4665
2008 .4417 .3191 .0000 5.8329 .7446
2009 .4756 .3566 -.3844 6.4000 .8370
2010 .4083 .3111 -.8250 2.2275 .4800

44
Table 5 Descriptive Analysis of Size
Size
Mean Median Min. Max. S.D
Years 2006 7.8227 7.8529 -2.9568 17.0436 3.9027
2007 7.9465 7.7016 -2.9384 17.6177 4.2379
2008 8.0770 7.4536 -2.9857 19.8473 4.2064
2009 7.9820 7.6253 -3.0883 18.4683 4.4314
2010 8.5342 8.0334 -2.9463 24.0161 4.4494
Table 6 Descriptive Analysis of Earnings per Share
EPS
Years 2006 22.1912 11.7178 -6.5542 267.0359 37.3507
2007 25.5829 10.8201 -14.6888 300.8731 51.7382
2008 27.5506 9.1255 -16.7484 322.2522 52.2328
2009 22.9331 8.5108 -39.0540 496.2485 66.0125
2010 28.2965 10.0192 -87.5179 531.5707 72.6604

45
Table 7 : Descriptive Analysis of Asset Growth
Growth
Mean Median Mini. Max. SD
Years 2006 .3055 .1906 -.0669 1.6897 .3480
2007 .1854 .1110 -.2087 1.3877 .2374
2008 .1744 .1561 -.8091 1.1034 .2830
2009 .4125 .1164 -.8812 12.2152 1.5743
2010 .2855 .1111 -.6691 9.1246 1.1127
Table 8 Descriptive Analysis of Leverage
LVRG
Mean Median Min. Max. S. D
Years 2006 .5001 .5192 .0592 .9987 .2156
2007 .5569 .5894 .0737 2.8286 .3633
2008 .5568 .5981 .0237 1.6500 .2763
2009 .5890 .5938 .0782 3.1482 .3981
2010 .5240 .5398 .0913 1.1883 .2626

46
Table 9 Descriptive Analysis of GDP Growth
GDP
Mean Median Mini. Max. S. D
Years 2006 .0660 .0660 .0660 .0660 .0000
2007 .0700 .0700 .0700 .0700 .0000
2008 .0580 .0580 .0580 .0580 .0000
2009 .0200 .0200 .0200 .0200 .0000
2010 .0410 .0410 .0410 .0410 .0000
Table 10 Descriptive Analysis of Interest Rate
Years 2006 .0983 .0983 .0983 .0983 .0000
2007 .1028 .1028 .1028 .1028 .0000
2008 .1076 .1076 .1076 .1076 .0000
2009 .1126 .1126 .1126 .1126 .0000
2010 .1179 .1179 .1179 .1179 .0000

47
Table 11 : Pearson's Correlation using Pooled Data
Variables MC DY PR Size EPS Growth
DY -.315**
PR -.254* .741**
Size .435** .039 -.054
EPS -.453** .022 .054 -.245*
Growth -.060 .164 -.099 -.110 -.050
LVRG .264* -.210 -.275* -.154 -.001 .206
**. Significant Correlation at 0.01 levels
*. Significant Correlation at 0.05 levels
Table 12 Simple Regression using Pooled Data
MC Coefficient Coef. Std. Err. T P>t [95% Conf. Interval]
DY -10.4992** 4.412791 -2.38 0.020 -19.32314 -1.6753
PR .5372 .6324573 0.85 0.399 -.7274879 1.8019
SIZE .1831*** .0431781 4.24 0.000 .0967705 .2695
EPS -.0122*** .0032683 -3.74 0.000 -.0187498 -.0057
Growth -.1174 .5181848 -0.23 0.821 -1.153618 .9187
LVRG 2.3308*** .778077 3.00 0.004 .7749877 3.8867
Constant 8.4628*** .7039447 12.02 0.000 7.055179 9.8704

48
Table 13 SIMPLE REGRESSION OF EACH VARIABLE WITH MC USING POOLED DATA
model1 model2 model3 model4 model5 model6
b/se b/se b/se b/se b/se b/se
DY -9.431*
(5.38)
PR -1.093*
(0.63)
Size 0.193***
(0.05)
EPS -0.016
(0.01)
Growth -0.308
(1.08)
LVRG 2.104**
(1.05)
Constant 11.052*** 11.020*** 8.969*** 10.929*** 10.614*** 9.383***
(0.34) (0.33) (0.49) (0.29) (0.36) (0.63)
F-Value 3.072* 3.005* 15.468*** 2.612 0.081 3.991**
N 68.000 68.000 68.000 68.000 68.000 68.000

49
Table 14 Different Regression Models using Pooled Data
model1 model2 model3 model4 model5
b/se b/se b/se b/se b/se
DY -8.408 -10.776** -10.735 -11.243 -10.499
(7.99) (4.83) (6.99) (9.81) (7.42)
PR -0.198 0.159 0.217 0.285 0.537
(0.83) (0.65) (0.64) (0.85) (0.77)
Size 0.201*** 0.162*** 0.164*** 0.183***
(0.05) (0.05) (0.06) (0.05)
EPS -0.012 -0.012 -0.012
(0.01) (0.01) (0.01)
Growth 0.157 -0.117
(0.96) (0.55)
LVRG 2.331***
(0.76)
Constant 11.084*** 9.437*** 10.036*** 9.970*** 8.463***
(0.35) (0.56) (0.48) (0.59) (0.69)
F-Value 1.589 7.775*** 3.904*** 2.802** 6.500***
N 68.000 68.000 68.000 68.000 68.000

50
Table 15 Step wise Regression Analysis: Model Summary
Model Summary
Std. Error of the

Model R R Square Adjusted R Square Estimate
1 .453a .205 .193 1.6425117211
2 .563b .317 .296 1.5342016013
3 .648c .420 .393 1.4249294428
4 .698d .488 .455 1.3497297988
Table 16 Stepwise Regression Analysis: ANOVA
Model Sum of Squares df Mean Square F Sig.
1 Regression 205.924 1 205.924 60.515 .000a
Residual 1150.164 338 3.403
Total 1356.088 339
2 Regression 317.840 2 158.920 51.583 .000b
Residual 1038.248 337 3.081
Total 1356.088 339
3 Regression 386.676 3 128.892 44.674 .000c
Residual 969.412 336 2.885
Total 1356.088 339
4 Regression 402.627 4 100.657 35.366 .000d
Residual 953.461 335 2.846
Total 1356.088 339
5 Regression 417.666 5 83.533 29.731 .000e
Residual 938.422 334 2.810
Total 1356.088 339

51
Table 17 Stepwise Regression Analysis: Coefficients on Pooled Data
Standardized
Unstandardized Coefficients Coefficients Collinearity Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 9.044 .216 41.927 .000
Size .184 .024 .390 7.779 .000 1.000 1.000
2 (Constant) 9.535 .221 43.177 .000
Size .156 .023 .329 6.759 .000 .958 1.044
EPS -.010 .002 -.294 -6.027 .000 .958 1.044
3 (Constant) 8.629 .283 30.487 .000
Size .168 .022 .356 7.509 .000 .944 1.059
EPS -.010 .002 -.288 -6.106 .000 .957 1.045
LVRG 1.463 .299 .227 4.885 .000 .986 1.014
4 (Constant) 9.263 .388 23.859 .000
Size .167 .022 .353 7.494 .000 .944 1.060
EPS -.010 .002 -.288 -6.153 .000 .957 1.045
LVRG 1.423 .298 .221 4.778 .000 .983 1.017
GDP -11.781 4.977 -.109 -2.367 .018 .996 1.004
5 (Constant) 9.462 .395 23.940 .000
Size .165 .022 .348 7.430 .000 .942 1.062
EPS -.010 .002 -.289 -6.211 .000 .957 1.045
LVRG 1.338 .298 .208 4.486 .000 .968 1.033
GDP -11.945 4.945 -.110 -2.416 .016 .996 1.004
PR -.279 .121 -.106 -2.314 .021 .984 1.016
a. Dependent Variable: MC

52
Table 18 Pearson's Correlation on Panel Data
Variables MC DY PR Size EPS Growth LVRG GDP
DY -.050
PR -.141** .669**
Size .390** .100 -.030
EPS -.361** .049 .002 -.206**
Growth -.022 .102 .002 -.045 -.003
LVRG .186** .045 -.118* -.115* .000 -.058
GDP -.129* -.147** -.007 -.020 .003 -.077 -.053
I .079 .118* -.026 .049 .024 .031 .034 -.766**
**. Significant Correlation at 0.01 levels
*. Significant Correlation at 0.05 levels

53
Table 19 Fixed Effect and Random Effect model (Excluding Interest)
MODEL-FE MODEL-RE
b/se p-value b/se p-value
DY -0.848 0.311 -1.147 0.166
(0.83) (0.83)
PR 0.011 0.867 -0.017 0.805
(0.06) (0.07)
Size 0.025 0.436 0.121*** 0.001
(0.03) (0.04)
EPS 0.004** 0.018 -0.002 0.194
(0.00) (0.00)
Growth -0.025 0.636 -0.004 0.912
(0.05) (0.04)
LVRG 0.049 0.785 0.291 0.168
(0.18) (0.21)
GDP -14.398*** 0.000 -13.781*** 0.000
(1.91) (2.05)
Constant 10.981*** 0.000 10.206*** 0.000
(0.28) (0.51)
F-Value 11.552***
N 340.000 340.000

54
Table 20 Fixed Effect and Random Effect model (Excluding GDP)
MODEL FE MODEL RE
b/se p-value b/se p-value
DY -0.266 0.788 -0.586 0.571
(0.98) (1.03)
PR -0.015 0.873 -0.044 0.661
(0.09) (0.10)
Size 0.018 0.614 0.120*** 0.002
(0.04) (0.04)
EPS 0.003* 0.052 -0.002 0.107
(0.00) (0.00)
Growth -0.003 0.958 0.016 0.740
(0.06) (0.05)
LVRG 0.107 0.608 0.355 0.133
(0.21) (0.24)
I 21.675*** 0.001 19.568*** 0.007
(6.37) (7.30)
Constant 7.924*** 0.000 7.359*** 0.000
(0.70) (0.82)
F-Value 4.375***
N 340.000 340.000

55
Table 21 Simple Regression of all variables with MC using panel Data
model1 model2 model3 model4 model5 model6 model7 model8
b/se b/se b/se b/se b/se b/se b/se b/se
DY -1.370
(2.52)
PR -0.371**
(0.15)
Size 0.184***
(0.03)
EPS -
0.013***
(0.00)
Growth -0.049
(0.12)
LVRG 1.199**
*
(0.42)
GDP -
13.941**
(5.59)
I 22.714
(15.21)
Constan 10.592** 10.696** 9.044*** 10.851** 10.544** 9.876** 11.242** 8.081**

t * * * * * * *
(0.15) (0.13) (0.26) (0.13) (0.12) (0.25) (0.31) (1.64)
F-Value 0.295 5.803** 49.013** 19.209** 0.166 8.067** 6.222** 2.231

* * *
N 340 340 340 340 340 340 340 340

56
Table 22 Stepwise Regression using Panel Data: MODEL SUMMARY
Adjusted RStd. Error of the

Model R R Square Square Estimate
1 .390a .152 .149 1.8446821
2 .484b .234 .230 1.7552361
3 .534c .285 .279 1.6985742
4 .545d .297 .289 1.6870547
5 .555e .308 .298 1.6762002
Table 23 Stepwise Regression using Panel Data: ANOVA
Model Sum of Squares df Mean Square F Sig.
1 Regression 205.924 1 205.924 60.515 .000a
Residual 1150.164 338 3.403
Total 1356.088 339
2 Regression 317.840 2 158.920 51.583 .000b
Residual 1038.248 337 3.081
Total 1356.088 339
3 Regression 386.676 3 128.892 44.674 .000c
Residual 969.412 336 2.885
Total 1356.088 339
4 Regression 402.627 4 100.657 35.366 .000d
Residual 953.461 335 2.846
Total 1356.088 339
5 Regression 417.666 5 83.533 29.731 .000e
Residual 938.422 334 2.810
Total 1356.088 339

57
Table 24 Stepwise Regression using Panel Data: Coefficients

Coefficients
Unstandardized Coefficients Standardized Coefficients Collinearity Statistics
Model B Std. Error Beta t Sig. Tolerance VIF
1 (Constant) 9.044 .216 41.927 .000
Size .184 .024 .390 7.779 .000 1.000 1.000
2 (Constant) 9.535 .221 43.177 .000
Size .156 .023 .329 6.759 .000 .958 1.044
EPS -.010 .002 -.294 -6.027 .000 .958 1.044
3 (Constant) 8.629 .283 30.487 .000
Size .168 .022 .356 7.509 .000 .944 1.059
EPS -.010 .002 -.288 -6.106 .000 .957 1.045
LVRG 1.463 .299 .227 4.885 .000 .986 1.014
4 (Constant) 9.263 .388 23.859 .000
Size .167 .022 .353 7.494 .000 .944 1.060
EPS -.010 .002 -.288 -6.153 .000 .957 1.045
LVRG 1.423 .298 .221 4.778 .000 .983 1.017
GDP -11.781 4.977 -.109 -2.367 .018 .996 1.004
5 (Constant) 9.462 .395 23.940 .000
Size .165 .022 .348 7.430 .000 .942 1.062
EPS -.010 .002 -.289 -6.211 .000 .957 1.045
LVRG 1.338 .298 .208 4.486 .000 .968 1.033
GDP -11.945 4.945 -.110 -2.416 .016 .996 1.004
PR -.279 .121 -.106 -2.314 .021 .984 1.016
a. Dependent Variable: MC

58
Figure 1 Data Normality Curve of Pooled Data

59
Figure 2: Data Normality Curve of Panel Data

60
8. APPENDICES II
KSE-100 Index include total 75 companies of Non-Financial sector, Out of which we
selected 68 companies, Complete Data for remaining 7 companies are not found.
Following is the list of our sample companies.
Table 25 List of sample firms listed at KSE-100 Index from non financial sector
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ϮϮ ^ƵŝƐŽƵƚŚĞƌŶ'ĂƐĐŽ͘
Ϯϯ 'ůĂǆŽ^ŵŝƚŚŬůŝŶĞWĂŬ>ƚĚ͘
Ϯϰ >ŽƚƚĞWĂŬWdůƚĚ͘
Ϯϱ EŝƐŚĂƚDŝůůƐ>ƚĚ
Ϯϲ WĂŬdŽďĂĐĐŽĐŽ͘
Ϯϳ DŝůůĂƚdƌĂĐƚŽƌ>ƚĚ
Ϯϴ ^ŚĞůůWĂŬŝƐƚĂŶ>ƚĚ͘
Ϯϵ hŶŝůŝǀĞƌWĂŬĨŽŽĚƐ>ƚĚ͘
ϯϬ ďďŽƚƚ>ĂďŽƌĂƚŽƌŝĞƐ>ƚĚ͘
ϯϭ ƚƚŽĐŬZĞĨŝŶĞƌǇ>ƚĚ͘
ϯϮ ^ƵŝEŽƌƚŚĞƌŶ'ĂƐĐŽ͘
ϯϯ ƚůĂƐ,ŽŶĚĂ>ƚĚ
ϯϰ WŚŝůŝƉDŽƌƌŝƐWĂŬ
ϯϱ /ďƌĂŚŝŵ&ŝďĞƌƐ>ƚĚ͘

61
^ƌ͘η ŽŵƉĂŶǇEĂŵĞ
ϯϲ '<ĞŵĞŶƚĐŽ͘
ϯϳ DĂƌŝ'ĂƐĐŽ
ϯϴ WĂŬŝƐƚĂŶ/ŶƚĞƌŶĂƚŝŽŶĂůĐŽŶƚĂŝŶĞƌƐ>ƚĚ͘
ϯϵ ^ŝĞŵĞŶƐ;WĂŬŝͿŶŐ͘Ž͘
ϰϬ ů'ŚĂǌŝdƌĂĐƚŽƌƐy
ϰϭ /ŶĚƵƐǇŝŶŐĐŽ͘
ϰϮ WĂĐŬĂŐĞƐůƚĚ
ϰϯ ǇĐŽWĞƚƌŽůĞƵŵ>ƚĚ͘
ϰϰ dĂŶĚůŝĂŶǁĂůĂƐƵŐĂƌDŝůůƐ>ƚĚ͘
ϰϱ dŚĂůůƚĚ
ϰϲ ĂƚĂWĂŬůƚĚ
ϰϳ ůĂƌŝĂŶƚWĂŬŝƐƚĂŶůƚĚ
ϰϴ WĂŬ^ƵǌƵŬŝDŽƚŽƌƐĐŽ͘
ϰϵ dƌŝWĂĐŬ&ŝůŵƐůƚĚ͘
ϱϬ :͘͘t͘ƐƵŐĂƌDŝůůƐ>ƚĚ͘
ϱϭ ƚƚŽĐŬĐĞŵĞŶƚ>ƚĚ͘
ϱϮ 'ŚĂŶŝ'ůĂƐƐůƚĚ
ϱϯ /ŶƚĞƌŶĂƚŝŽŶĂů/ŶĚƵƐƚƌŝĞƐ>ƚĚ͘
ϱϰ ^ŚŝĨĂ/ŶƚĞƌŶĂƚŝŽŶĂů,ŽƐƉŝƚĂů
ϱϱ DƵƌĞĞƌĞǁĞƌǇ
ϱϲ WĂŬŝƐƚĂŶĂďůĞƐ>ƚĚ͘
ϱϳ EĞƚƐŽůĞdĞĐŚŶŽůŽŐŝĞƐ>ƚĚ͘
ϱϴ ^ĞĐƵƌŝƚǇWĂƉĞƌ>ƚĚ͘
ϱϵ WĂŬŝƐƚĂŶ/ŶƚĞƌŶĂƚŝŽŶĂůŝƌůŝŶĞƐŽŵƉĂŶǇ
ϲϬ EŝƐŚĂƚŚƵŶŝĂůƚĚ͘
ϲϭ ĞƐƚǁĂǇĞŵĞŶƚůƚĚ͘
ϲϮ WĂŬ^ĞƌǀŝĐĞƐůƚĚ͘
ϲϯ 'ƌĂǇƐŽĨĂŵďƌŝĚŐĞ
ϲϰ <͘͘^͘͘
ϲϱ :ĂǀĞĚĂŶĞŵĞŶƚůƚĚ͘
ϲϲ &ĞƌŽǌĞϭϴϴϴDŝůůƐ
ϲϳ WĂŬdĞůĞƉŚŽŶĞĐĂďůĞƐůƚĚ͘
ϲϴ dZ'WĂŬŝƐƚĂŶůƚĚ
Table 26 List of Non-financial firms listed at KSE-100 Index Excluded from the Sample
^ƌ͘η ŽŵƉĂŶǇEĂŵĞ ZĞĂƐŽŶĨŽƌĞǆĐůƵĚŝŶŐ

ϲϵ WĂĐĞ;ƉĂŬͿ>ƚĚ͘ ƐƚĂďůŝƐŚĞĚŝŶϮϬϬϳ͕KŶůǇϮϬϬϵĂŶĚϮϬϭϬĚĂƚĂĂǀĂŝůĂďůĞ
ϳϬ &ĂƚŝŵĂ&ĞƌƚŝůŝǌĞƌĐŽ͘ ƐƚĂďůŝƐŚĞĚŝŶϮϬϬϵ͕KŶůǇϮϬϬϵĂŶĚϮϬϭϬĚĂƚĂĂǀĂŝůĂďůĞ
ϳϭ EŝƐŚĂƚWŽǁĞƌ>ƚĚ ƐƚĂďůŝƐŚĞĚŝŶϮϬϬϵ͕KŶůǇϮϬϬϵĂŶĚϮϬϭϬĚĂƚĂĂǀĂŝůĂďůĞ
ϳϮ DĞĚŝĂdŝŵĞƐ>ƚĚ ƐƚĂďůŝƐŚĞĚŝŶϮϬϬϵ͕KŶůǇϮϬϬϵĂŶĚϮϬϭϬĚĂƚĂĂǀĂŝůĂďůĞ
ϳϯ ŐƌŝƚĞĐŚ>ŝŵŝƚĞĚ ƐƚĂďůŝƐŚĞĚŝŶϮϬϬϵ͕KŶůǇϮϬϬϵĂŶĚϮϬϭϬĚĂƚĂĂǀĂŝůĂďůĞ
ϳϰ ŶŐƌŽWŽůǇŵĞƌ>ƚĚ ƐƚĂďůŝƐŚĞĚŝŶϮϬϬϵ͕KŶůǇϮϬϬϵĂŶĚϮϬϭϬĚĂƚĂĂǀĂŝůĂďůĞ
ϳϱ /ŶƚĞƌŶ͘^ƚĞĞů>ƚĚ ŽŵƉůĞƚĞĚĂƚĂŶŽƚĨŽƵŶĚ

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2. Theoretical Framework ..................................................................................................... 5

2.1 Bird in hand Theory ................................................................................................... 5

2.2 Dividend Irrelevancy Theory ..................................................................................... 5

2.3 Agency Theory ........................................................................................................... 6

2.4 Tax effect Theory ....................................................................................................... 6

2.5 Signaling Theory ........................................................................................................ 7

2.6 Life cycle Theory ....................................................................................................... 8

2.7 Catering Theory ......................................................................................................... 8

3. Literature Review ............................................................................................................ 10

3.1 Studies in Developed Countries ............................................................................... 10

3.2 Studies in Developing Countries .............................................................................. 14

3.3 Studies in Pakistan ................................................................................................... 17

4. Research Design .............................................................................................................. 21

4.1 Population and Sample ............................................................................................. 21

4.2 Model ....................................................................................................................... 21

4.3 Measurement of variables ........................................................................................ 22

5. Results ............................................................................................................................. 25

5.1 Descriptive Analysis ................................................................................................ 25

5.2 Regression Analysis ................................................................................................. 30

5.2.1 Pooled Data ...................................................................................................... 30

5.2.2 Panel Data ......................................................................................................... 32

6. Discussion ....................................................................................................................... 35

6.1 Limitations ............................................................................................................... 35

6.2 Future Research ........................................................................................................ 35

6.3 Conclusion................................................................................................................ 36

Corporate payout policy and Market Capitalization

References ............................................................................................................................... 37

7. Appendices I.................................................................................................................... 42

8. Appendices II .................................................................................................................. 60

LIST O TABLES AND FIGURES

Corporate payout policy and Market Capitalization

Corporate payout policy and Market Capitalization

Corporate payout policy and Market Capitalization

Second assumption of the dividend irrelevancy theory is about rational behavior. MM

Corporate payout policy and Market Capitalization

Corporate payout policy and Market Capitalization

2.1 BIRD IN HAND THEORY

2.2 DIVIDEND IRRELEVANCY THEORY

Corporate payout policy and Market Capitalization

2.3 AGENCY THEORY

2.4 TAX EFFECT THEORY

Corporate payout policy and Market Capitalization

2.5 SIGNALING THEORY

Corporate payout policy and Market Capitalization

2.6 LIFE CYCLE THEORY

2.7 CATERING THEORY

Corporate payout policy and Market Capitalization

Corporate payout policy and Market Capitalization

3.1 STUDIES IN DEVELOPED COUNTRIES

Corporate payout policy and Market Capitalization

Corporate payout policy and Market Capitalization

Corporate payout policy and Market Capitalization

Corporate payout policy and Market Capitalization

3.2 STUDIES IN DEVELOPING COUNTRIES

Corporate payout policy and Market Capitalization

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