Effects of Textile Policy on Profitability and Dividend Payout Ratio of Textile Industry in Pakistan

Abstract

As the textile industry is one of the main source of our country’s earnings for which the substantial investment from the shareholders is required. However, it is necessary to evaluate the effects of textile policy to evaluate the dividend payout in order to enhance the investment in this respective sector. On the other, if the profitability of the sector would be higher, then ultimately firms will pay out the higher dividends. Thus, evaluating the effects of textile policy on profitability of the textile sector is also crucial. The objective of the study is to find out the effects of textile policy on profitability & dividend payout ratio of the textile sector of Pakistan. The policy implemented by government in different tenure one is from 2009- 2014 and second is from 2015 to till date. The study used quantitative research based yearly pool data of 9 years taken from financial statements of listed companies of the textile industry. Data was analyzed using multiple regression analysis.

The findings indicated that no significant impacts found on the effect of policy change in 2015. Dividend payout ratio remained insignificant by the measures of textile policy of the selected listed companies. Hence, there is an immense need of an improved policy for better outcomes in the textile industry as it is a prodigious sector in the economy of Pakistan.

Keywords: dividend payout ratio, profitability, textile industry, textile policy, dividend policy, determinant of dividend policy