REVIEWING THE RELATIONSHIP BETWEEN DIVIDEND AND FREE CASH FLOW OF NON-FINANCIAL FIRMS OF KSE 100

Year 2022, , 107 - 123, 15.04.2023

Saad Ullah Mughal , Muhammad Muddasir

https://doi.org/10.33818/ier.1227924

Abstract

In this research, we have worked toward two main objectives. Firstly, we have worked upon the measures of long-term and short-term investments, and lastly, we have checked whether the dividend payout of the small fifty and big fifty firms is indifferent or not regarding free cash flow. For this research, the sample size we took was all the listed companies in the KSE 100 Index of the Pakistan Stock Exchange; further, we divided them into financial and non-financial firms and did our testing only on the non-financial firms (64 companies in total) between the time period starting from 2009 to 2018. We developed four regression models in total to test our arguments and bifurcated our models into two series. In our first series, we checked the random effect, and in the subsequent series, we checked the fixed effect.In the end, our results came out as expected, and we have been able to concur with our defined objectives. We can conclude that, firstly, there is a strong relationship between long-term and short-term investments, and that when it comes to the payment of dividends, the firms are different depending upon their size.

Keywords

Free Cash Flow, Dividend, KSE-100, Non-Financial Firms, Regression Analysis

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