Dividend Payout, Capital Expenditure and Working Capital: Evidence from Emerging Economy

This study explores the effects of capital expenditure and working capital on dividend payout ratio by using the data of Pakistan non-financial listed firms. For empirical investigation, this study used data from 2011 to 2020. OLS method of regression is used to estimate the effect of capital expenditure and working capital on dividend payout ratio. Results suggest that positive & insignificant effect of capital expenditure on dividend payout ratio. This finding suggests that Pakistan non-financial firms try to maintain or enhance the dividend payout ratio to show as a signal of future growth but this is inconsistent across all sample firms due to institutional and ownership structure. Positive & significant effect of working capital on dividend payout ratio suggest that firms with efficient working capital management and high level of liquidity is able to distribute more dividend among shareholders. This study contributes in literature that working capital compare with capital expenditure play vital role for decision of dividend payout from the non-financial context of Pakistan.