IMPACT OF DIVIDEND POLICY ON SHAREHOLDER WEALTH: A CASE OF TOP PERFORMING COMPANIES OF PSX

This is a quantitative research conducted out to find the Shareholder value maximization. What are the factors that contribute to increase the shareholder wealth, their satisfaction and intentions to invest in a particular share? To study this further we analyzed the impact of dividend policy on shareholder wealth, considering the dividend policy as the most important factor in increasing shareholder wealth. To study this relationship the top performing companies of Pakistan Stock Exchange were chosen in our sample that PSX announces every year. The independent variable were Dividend per share, Retained earnings per share, Return on equity and Lagged market price per share. Whereas the dependent variable, to measure the shareholder wealth is Market price per share. To analyze the relationship, the correlation and regression analysis were applied on E-views. After the analysis a positive relation is found between the independent and dependent variables and the overall variables with the model are found to be statistically significant. In doing this research an intensive amount of literature has been reviewed that helped in further explanation of theories and the variable analyzed in this research. Keywords: Dividends per share, retained earnings per share, return on equity, market price per share and lagged market price per share