EFFECT OF DIVIDEND POLICY ON COMPANY PERFORMANCE

Abstract

This study is examined to effect of dividend policy on company performance. The main objectives of this study are to assess the effects of dividend policy on companies performance, to examine the relationship between dividend policy i.e dividend yield, dividend payout ratio, current ratio, leverage ratio and firm size on performance i.e return on assets and return on equity, to analyze the impact on dividend policy i.e dividend yield, dividend payout ratio, current ratio, leverage ratio and firm size on performance i.e return on assets and return on equity. D/Y, DPR, CR, LR, and FS are the independent variables and ROA and ROE are the dependent variable in this study. Mean, standard deviation, correlation and multiple regression analysis are taken to present data. The major finding of this study based on these regression coefficients OF ROA, Dividend Yield (D/Y), Current Ratio (CR), and Leverage Ratio (LR) emerge as significant predictors of Return on Assets (ROA) for manufacturing companies in Nepal. Dividend Yield and Current Ratio positively impact ROA, while Leverage Ratio negatively impacts ROA. Dividend Payout Ratio and Firm size, on the other hand, do not appear to have a significant influence on ROA based on this model. These findings provide valuable insights for understanding the drivers of financial performance within the manufacturing sector and can inform strategic decision-making related to dividend policy and financial management. Based on the regression coefficients of ROE, Dividend Yield (D/Y) and Dividend Payout Ratio (DPR) emerge as significant predictors of Return on Equity (ROE) for manufacturing companies in Nepal. A higher dividend yield is associated with higher ROE, while a higher DPR is linked to lower ROE. Current Ratio (CR), Leverage Ratio (LR), and Firm Size (FS) do not significantly impact ROE in this model, with their coefficients and significance levels suggesting minimal or negligible effects on ROE. These findings provide valuable insights into the drivers of equity profitability within the manufacturing sector and can inform strategic decision-making related to financial management and dividend policy

Keywords: Dividend policy, Size, Return on Assets, Return on Equity, Leverage Rati