THE EFFECT OF STOCK’s LIQUIDITY ON DIVIDEND PAYOUT OF THE COMPANIES LISTED

تاریخ : اکتوبر ۲۰۱۷ - جنوری ۲۰۱۸

Abstract: Every Organizations always consider those determinants which effect on their daily to daily operations before moving to implement any decision. Liquidity is one of the most important component which every company keep in consideration. Because it indicates the company’s ability to convert its short term assets into cash immediately without losing its real value to pay for its short term liabilities. Companies have less default chances if they have most frequent liquid assets available. Most Investors prefer those companies which have future growth, have stock’s liquidity so that it can be sold quickly and pay high dividends. We have designed this study to determine the effect of stock’s liquidity on the dividend payout ratio. This study focused on the eighty two companies out of hundred companies which are listed in KSE-100 Index over the period of 2010 to 2015. We have used secondary data which is taken form BLOOMBERG. Standard Capital website and company’s financial statements are considered while collecting missing data. Dividend payout is the dependent variable while liquidity is the independent variable. Share turnover which is also called stock’s liquidity is used as a liquidity measure for this study. The regressions analysis was taken to examine the data. The main findings of the study is that liquidity has no effect on the listed firms, using either time fixed or entity fixed effect. However, Return on Asset (ROA) has a positive effect on dividend payout in time fixed effect. The firm size has a negative impact on the dividends payout of the firm in time fixed as well as in cross sector fixed effects regression. It is also notable that leverage has a positive impact on dividend payout in time fixed effects.