Dividend payment practices in the non-financial sector of Pakistan: empirical evidence from the Karachi Stock Exchange

This study intends to investigate the dividend payment practices of the non-financial sectors of the Karachi Stock Exchange. All the dividend paying sectors of the Karachi Stock Exchange were investigated for the period 2004–2010. A well developed mixture of six variables along with the descriptive statistics was used to scrutinize the dividend paying behavior of different sectors. Inconsistency, reluctance and trivial average rate from 1.5% to 5% of the dividends were being paid by the sectors. Profitability was not functioning adequately with regard to dividends, and the highly profitable sectors were also in the habit of paying at a nominal rate. It was noticed that most of the funds were used to finance growth opportunities, but only the mature and highly Profitable sectors were keeping pace with growth opportunities and endeavoring to transform them for shareholders. Market capitalization was seen to oppose dividend trends in almost all the sectors. All the sectors tended to disburse the dividend rate at the very beginning, middle and at least to make a drift in it during the last couple of years, particularly in 2010. Corporate governance should be strengthened in order to protect the rights of individual shareholders.