The Impact of Political and Macroeconomic Variables on the Dividend Policy: Evidence from an Emerging Economy

Abstract

This study aims to examine the impact of political and economic factors on the
corporate decision of dividend payout. The data is used from year 1999 to 2019 for the
110 listed non-financial firms of Pakistan and data for political and economic indicators
is obtained from the website of World Bank. The econometric estimation technique
ARDL (Autoregressive Distributed Lag Models) is used to analyze the data. The findings
suggest that the decision of paying dividend is significantly affected by the economic
factors and political factors cause the change of perception of management thus making
them to take decisions that can mitigate political risks, thus the findings contribute
significantly in the existing literature. The policy makers and top management of the
firms should account for the political and economic situation while devising the
dividend policy, particularly in the emerging economies.