Determinants of Dividend Policy and its Impact on Firm's Value: An Evidence of Automobile Sector in Pakistan

Abstract

Research on a company's dividend policy is crucial because it ultimately affects the growth and performance of the company. The study's objective is to determine the variables that affect dividend policy, and both micro and macroeconomic indicators have been selected. Dividend policy is an important factor that successfully mediates the connection between certain economic variables and the firm value. Data were gathered from five publicly traded automobile firms in Pakistan for the years 2011 to 2021. The stock price valuation of automobile companies has been determined using the Linear Regression Model for relationship analysis of variables and the Sobel test method for the mediation impact of dividend policy. The study's findings demonstrate that economic variables like micro and macro include a most important impact on the dividend policy, and the results of the Sobel technique and findings on the stock prices of Pakistan’s automobile firms confirm these findings.