Earnings Management

European Journal of Business and Management ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 4, No.1, 2012

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Earning Management and Dividend Policy: Empirical evidence from Pakistani listed companies
Jahanzaib Haider (Corresponding author) Bahaudin Zakariya University, Multan Sub-Campus, Dera Ghazi Khan, Pakistan. Tel: [phone], E-mail: [e-mail] Akbar Ali Bahaudin Zakariya University, Multan, Sub-Campus, Dera Ghazi Khan, Pakistan. Tel: [phone], E-mail: [e-mail]

Tahira Sadiq Nust Business School, Islamabad, Pakistan. E-mail: [e-mail]

Abstract: The study is an effort to find out the impact of earning management on dividend policy in Pakistan. A set of listed companies from Karachi stock exchange (KSE) 100 indexes have been investigated to analyze the relationship from the year 2005 to 2009 in Pakistan. Dividend policy has been measured by dividend payout whereas earning management has been quantified by discretionary accruals and discretionary accrual is used as a proxy to determine earning management. Modified cross sectional model (1995) has been used to measure discretionary accruals. Regression analysis shows that earning management has impact on dividend policy that rejects our null hypothesis. But coefficient shows that the relationship is so weak that is near to no relationship. Reason behind this no impact is economic decline period, because earning management changes every year. In the decline period our earning management was increase and the companies starts downsizing divided payment. Key words: Dividend Policy, Earning Management, Karachi Stock Exchange.

1.

Introduction:

Earning management and dividend policy is among the popular topics discussed in today’s modern business. In modern businesses it is duty of the manager to make a number of decisions about the finance of the corporation. It is an important decision that the manager must come across the firm earning management and

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