Dividends and Investment Decisions: A Case of Pakistan
DOI:
https://doi.org/10.56220/uwjms.v9i2.277Keywords:
Dividend Decision, Investment Decision, Credit Rating, Corporate Governance, Investment Opportunities, Board Size, Leverage, Firm SizeAbstract
Purpose: Investment and dividend decisions are not dependent on one another in an efficient market. The presumptions of efficient markets do not apply to emerging markets. Due to financial constraints, businesses must decide between dividend payments and investments. There has been much discussion in the finance literature over the relationship's dependency and irrelevance. Thus, this study examines how corporate governance and credit rating affect a company's decisions about dividends and investments.
Design and Methodology: The sample size included 434 observations from all non-financial PSX-listed firms from 2013 to 2019. Panel regressions are used to examine the data using econometric tools.
Findings: The findings show that there is a trade-off between investment and dividend decisions, credit rating, and corporate governance. Due to cash constraints, businesses in developing economies like Pakistan must decide between dividends and investments.
Implications: Overall, the study points out that using credit ratings and appropriate governance helps firms improve their reputation, earn trust from investors, and stay attractive for those interested in long-term investments.
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