Abstract
2 Abstract: Present study investigated the impact of free cash flow on corporate dividend policy in four emerging economies of South Asia i.e. Bangladesh, India, Pakistan and Sri Lanka. The data of 250 listed companies collected form published annual reports from 2006-10. Based on the estimated results it was evident that liquidity plays major role in distribution of cash dividend and in order to pay regular dividends firm needs to maintain strong cash reserves. The results showed that cash flow from operations is an important factor affecting the firm's ability to pay dividends especially in India and Pakistan. However, the dividend payout of firms from Sri Lanka and Bangladesh was not affected much from the cash flow from operations.
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