Dividend policy is an important aspect of the organization’s corporate policies about which many researchers argued. It has become one of the most debatable topic for researchers due to the vagueness of its theories on the significance of dividend policy while indicating firm’s value. In this competitive environment the challenge to financial experts is to develop a dividend policy aiming at maximizing shareholder’s wealth by efficient utility of investment. So, there is a need to find out the determinants of dividend payout policy that ultimately affect the firm’s performance. These include firm size, debt, profitability, liquidity and sales. The main purpose of this research is to explore the dividend policy determinants of concerned firms by using a conceptual model that may help in increasing firms’ performance and shareholders’ interest. The firms of oil and gas field of Pakistan were selected as sample for this research and to analyze the determinants of dividend payout requires practical efforts. For this purpose, various types of statistical techniques have been used namely descriptive statistics, correlation and regression analysis. Entire sample was analyzed on yearly basis for more comprehensive understanding from 2011 to 2018. The findings of the study indicated that there is no single best dividend policy that fits on all firms both at micro and macro level. Due to the differences in the conditions that correspond to firm-specific (financial policies, production processes, management style, Human Resource Management etc.) as well as industry-specific (social, cultural, political, technical, economic environment etc.) every firm decides its own dividend policy that tends to the potential long term success of the business. In this scenario, a unique dividend policy doesn't seem a good fit for all the firms. Keywords: Determinants, Dividend, Dividend Policy, Oil and Gas Sector, Sales, Assets Turnover, Debts

Table of Contents 

CHAPTER – 1 .............................................................................................................. 1 

1.1  Introduction/Background: ................................................................................ 1 

1.2  Problem Statement ............................................................................................. 4 

1.3  Research Questions ............................................................................................ 5 

1.4  Objectives of the Study ...................................................................................... 6 

1.4.1  Primary Objective ....................................................................................... 6 

1.4.2  Secondary Objectives.................................................................................. 6 

1.5  Significance of the Study.................................................................................... 6 

1.6   Scope of Research: ............................................................................................. 7 

Chapter 2 ...................................................................................................................... 8 

Literature Review ........................................................................................................ 8 

2.1  Introduction ........................................................................................................ 8 

2.2   Dividend .............................................................................................................. 8 

2.3  Dividend Policy ................................................................................................... 9 

2.4  History ............................................................................................................... 11 

2.5  Theories of Dividend ........................................................................................ 11 

2.5.1 Dividend Relevance Theories ........................................................................ 12 

2.5.1.1 Signaling Theory .......................................................................................... 12 

2.5.1.2 Agency Theory.............................................................................................. 14 

2.5.1.3 Bird-in-Hand Theory ................................................................................... 14 

2.5.2 Dividends Irrelevance Theory ...................................................................... 16 

2.6  Determinants of Dividends .............................................................................. 17 

2.6.1  Profitability ................................................................................................ 17 

2.6.2  Debt ............................................................................................................ 19 

2.6.3  Sales ............................................................................................................ 20 

2.6.4  Assets .......................................................................................................... 20 

2.6.5  Liquidity..................................................................................................... 20 

2.7  Others Researchers’ View ............................................................................... 21 

2.8  Oil and Gas Sector of Pakistan ....................................................................... 30 

2.9  Conclusion ......................................................................................................... 31 

Chapter 3 .................................................................................................................... 33 

Research Methodology and Design .......................................................................... 33 

3.1  Introduction ...................................................................................................... 33 

3.2  Dimensions of the Study .................................................................................. 33 

3.3  Purpose of the Study and Sample Selection ................................................... 33 

3.4  Sources of Data Collection ............................................................................... 34 

3.5  Data Analysis Assumptions ............................................................................. 34 

3.6  Sampling ............................................................................................................ 35 

3.7  Dependent and Independent Variables .......................................................... 36 

3.7.1  Dependent Variables ................................................................................. 36 

3.7.2  Independent Variables.............................................................................. 36 

3.8  Hypothesis of the study .................................................................................... 36 

3.9  Conceptual framework .................................................................................... 37 

3.10  Research Design ............................................................................................ 37 

3.10.1  A Logical Approach from Means to an End .......................................... 37 

Chapter 4 .................................................................................................................... 39 

Empirical Analysis ..................................................................................................... 39 

4.1  Introduction ...................................................................................................... 39 

4.2  Descriptive Statistics ........................................................................................ 39 

4.2.1 Bar Charts ...................................................................................................... 41 

4.3  Correlation Analysis ........................................................................................ 47 

4.4  Regression Analysis .......................................................................................... 49 

Chapter-5 .................................................................................................................... 53 

Findings, Conclusion and Recommendations.......................................................... 53 

5.1  Findings ............................................................................................................. 53 

5.1.1  Assets .......................................................................................................... 54 

5.1.2  Liabilities ................................................................................................... 54 

5.1.3  Sales Revenue ............................................................................................ 55 

5.1.4  Earnings Before Tax ................................................................................. 56 

5.2  Conclusion ......................................................................................................... 58 

5.3  Recommendations for Further Studies .......................................................... 59 

References .................................................................................................................... 62