Bidirectional Relationship between Firm Performance and Dividend Payout Policy: A Study of Chemical Sector in Emerging Economies in Pakistan

The study explains the relationship of dividend payout policy on the business performance of companies that exist in Chemical of Pakistan. 100 companies are selected from Chemical sector. Relationship of dividend payout policy and business performance was controlled with four variables based on relevant theories. These variables include size of company, growth of company, leverage (debt to equity ratio) and corporate governance index. Panel data is collected from 2012-2017 (six years) and then analyzed with unit root, descriptive statistics, correlation analysis, OLS regression, Lagrange multiplier, Huasman test, Fixed effect and Random effect models. Following key findings for each research objective were obtained by applying the adopted research method on the data through the adopted method of analyses: The results showed that the no sign of a relationship between their dividend payout policy and profitability and so there is no controlling factor effective due to the absence of any relationship. Thus, the hypotheses were rejected.