3. Research Methodology:

3.1. Data collection and sampling: This study used the secondary data which is collected from the listed company’s data of Pakistan stock exchange and annual reports published at State bank of Pakistan. Secondary data is the data which is already used in some other research work. The data is collected from the period of 2007-2016.

3.2 Statistical Techniques:

We use multiple regression and descriptive statistics to check the behavior of the variables and to check the impact of dividend policy on shareholder’s wealth.

3.3 Data analysis:

3.3.1 Descriptive Statistics:

DIVIDEND_PER_SHARE DIVIDEND_YIELD EARNING_PER_SHARE SHARE_PRICE

Mean 12.35774 0.054559 20.38750 444.3725

Median 3.500000 0.036767 8.880000 108.5400

Maximum 368.9700 0.874738 261.2300 9300.000

Minimum 0.000000 0.000000 -19.69000 0.000000

Std. Dev. 29.80637 0.077043 36.68591 1366.195

Skewness 7.177092 5.562314 3.582715 5.109000

Kurtosis 75.25872 51.61312 18.16733 29.50858

Jarque-Bera 66711.37 30465.66 3458.770 9920.755

Probability 0.000000 0.000000 0.000000 0.000000

Sum 3645.533 16.04038 6014.313 131089.9

Sum Sq. Dev. 261195.4 1.739138 395681.6 5.49E+08

Observations 295 294 295 295

Interpretion:

Table reveals the descriptive statistics with their mean, median and standard deviation of all variables. The mean value of market value is the highest 444.3725, while next to this is mean of earning per share is 38750. Dividend yield has minimum mean value of 0.05. Standard deviation reveals the volatility in the data. Earning per share has highest standard deviation which shows that the great volatility in market value case by earning per share in KSE-30 index

3.3.2 Covariance Analysis:

DIVIDEND_PER_SHARE DIVIDEND_YIELD EARNING_PER_SHARE SHARE_PRICE

DIVIDEND_PER_SHARE 888.0608 0.444264 645.5451 18984.11

DIVIDEND_YIELD 0.444264 0.005915 -0.031726 -11.93440

EARNING_PER_SHARE 645.5451 -0.031726 1344.656 41277.77

SHARE_PRICE 18984.11 -11.93440 41277.77 1865816.

DIVIDEND_PER_SHARE DIVIDEND_YIELD EARNING_PER_SHARE SHARE_PRICE

DIVIDEND_PER_SHARE 888.0608 0.444264 645.5451 18984.11

DIVIDEND_YIELD 0.444264 0.005915 -0.031726 -11.93440

EARNING_PER_SHARE 645.5451 -0.031726 1344.656 41277.77

SHARE_PRICE 18984.11 -11.93440 41277.77 1865816.

Eps has negative relation with dividend yield -0.031726 and has positive relation with dividend per share 645.5451. Share price has positive relation with dividend per share 18984.11 and negative relation with dividend yield -11.93440

3.3.3 Correlation Analysis:

DIVIDEND_PER_SHARE DIVIDEND_YIELD EARNING_PER_SHARE SHARE_PRICE

DIVIDEND_PER_SHARE 1.000000

DIVIDEND_YIELD 0.193833 1.000000

EARNING_PER_SHARE 0.590744 -0.011249 1.000000

SHARE_PRICE 0.466374 -0.113599 0.824093 1.000000

Eps has weak negative relation with dividend yield -1% and has positive moderate relation with dividend per share 59%. Share price has positive moderate relation with dividend per share 47% and weak negative relation with dividend yield -11%

3.3.4 Regression Analysis:

Dependent Variable: SHARE_PRICE

Method: Least Squares

Date: 05/07/18 Time: 13:06

Sample: 1 296

Included observations: 294

Variable Coefficient Std. Error t-Statistic Prob.

C -79.86480 60.39000 -1.322484 0.1870

DIVIDEND_PER_SHARE 0.034825 1.917458 0.018162 0.9855

DIVIDEND_YIELD -1855.804 599.4859 -3.095659 0.0022

EARNING_PER_SHARE 30.63713 1.528810 20.03986 0.0000

R-squared 0.690015 Mean dependent var 445.8839

Adjusted R-squared 0.686809 S.D. dependent var 1368.278

S.E. of regression 765.7362 Akaike info criterion 16.13306

Sum squared resid 1.70E+08 Schwarz criterion 16.18318

Log likelihood -2367.560 Hannan-Quinn criter. 16.15313

F-statistic 215.1767 Durbin-Watson stat 0.859180

Prob(F-statistic) 0.000000

Adjusted R-Squared is 69% which is showing there is relationship between dependent variable Share price and independent dividend yield and dividend per share.

The regression coefficient results indicating that EPS is highly elastic because 1% change in this variable case 30.63% change in share price respectively.

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4. Result and conclusion:

I have conducted the research to examine the relationship between dividend policy on shareholder’s wealth of the multiple industries. For this study I have selected the sample of 30 listed companies of Pakistan Stock exchange. The data is collected for the period of 10 years from the year 2007 – 2016. The results are concluded by applying descriptive statistics and regression analysis between the dividend policy and shareholder’s wealth. From the results we concluded that dividend per share and earnings per share has a significant positive relationship with shareholder’s wealth while dividend yield has not a significant relationship with share price and earning per share which shows dividend per share are positively correlated with shareholder’ wealth.

The major objective of this research is to investigate the influence of dividend policy on firm’s performance and shareholders’ wealth. The total 51 companies from PSX index were sampled for the time period 2006–2015 by employing common constant effect model. Regression results state that dividend policy is positively linked with earning per share and share price. Based on the result, these variables of shareholders wealth are consistent with the bird in hand theory and clientele effect theory. Results obtained for dividend policy are consistent with signaling effect theory.