DOES THE DIVIDEND PUZZLE DEPEND ON HOW PAYOUT IS MEASURED? MULTI-PROXY EVIDENCE FROM NON-FINANCIAL FIRMS ON THE PAKISTAN STOCK EXCHANGE

Abstract

This study was an attempt to determine the stability of Firm-specific determinants of dividends on the 30 non-financial listed companies at the Pakistan Stock Exchange (PSX) from 2016 to 2025 and in terms of three conceptually different measures of dividend i.e. Dividend Payout Ratio (DPO), Dividend per Share (DPS) and Dividend Yield (DY). The six firm-level explanatory variables, namely asset growth (AG), collateral assets (COLLAS), current ratio (CR), debt-to-equity ratio (DER), earnings per share (EPS) and operating cash flow (OCF) are analyzed in combination with firm size (FS) as a control. The sources of secondary data were audited annual reports, companies’ disclosures and PSX portal. Pooled Ordinary Least Squares (POLS) regression had been estimated in EViews 14, with descriptive and Pearson-correlation analysis performed. The results obtained showed that the dividend determinants with positive sign are COLLAS, CR, EPS, OCF and FS and these determinants were found to be significant in all the three measures of dividends. In all, DER was negative but irrelevant. AG represented the primary source of proxy sensitivity: It was positive for DPO and DPS, yet negative for DY, indicating that growth and higher absolute or higher earnings-relative distributions could went hand in hand while generating a lower market-price-scaled yield. The methodological and empirical contribution of the study was thus inferences regarding the “dividend puzzle” are therefore partial to the measurement and single-proxy modelling masked important economic heterogeneity. For emerging market managers and investors, liquidity, profitability, cash generation, tangible collateral and organizational scale were a more reliable measure of the capacity for dividends than leverage alone. The conclusions confirm a holistic view of signaling- and agency-, pecking-order- and life-cycle augmented and showed that the chosen payout proxy affects the interpretation given to growth.