Stock Market Investors’ Guide to Corporate Dividend Policy: Evidence from Pharmaceuticals and Chemicals Industries in Bangladesh

  • Tanbir Ahmed Chowdhury
  • Jannatunnesa Jannatunnesa East West University


Dividend policy has been an important component in the arena of financial literature and providing evidence that dividend payout decisions are affected by various factors. Numerous studies have been conducted so far on corporate dividend policy in Bangladesh. The pharmaceuticals and chemicals industries of Bangladesh offer a lot of investment panorama for the retail investors. This research has been an endeavor to determine the factors affecting the dividend policy of these promising industries, and guide the investment decisions of the equity investors. In this attempt, this study is also a unique one to incorporate the chemicals industry along with the pharmaceuticals industry as both the industries constitute the 'pharmaceuticals and chemicals sector' listed in the stock market of Bangladesh. The study is a quantitative one based on secondary data. It comprises of different statistical analyses such as descriptive statistics, correlation matrix and multiple linear regression analysis, etc. Firm size, growth, liquidity, profitability, last year's dividend and P/E ratio are used as dependent variables. Besides, ownership structure, firm age, market share, and risk are used as control variables. The study explores that firm size has significant negative and last year’s dividend has significant positive relationship with dividend payout. However, dividend payout does not depend on firm growth, liquidity, profitability and P/E ratio of a firm. The research outcome may have important implications for the improvement of investors' perceptions, which may assist them in their investment decisions in the researched industries. Certainly more work lies ahead to add to explanations for why some of the factors affect the dividend policy of the industries, while others have no significant impact thereon.

Author Biography

Jannatunnesa Jannatunnesa, East West University

Senior Lecturer

Department of Business Administration

Research Articles