Impact of Financial Leverage on Dividend Policy: Case of Karachi Stock Exchange 30 Index?

In such a complex corporate environment it is the challenge to the finance manager of the firm in the long run prospective with the objective of maximizing the owner wealth. With the view to achieve the objectives of the organization, finance manager have to put the due attention on the capital structure of the organization. The optimum capital structures of company have to lead to more profitability. This paper investigates the impact of financial leverage on the dividend policy of the Pakistani firms. The research conducted on the Karachi stock exchange companies listed in KSE-30 index during 2005-2010. The primary objective of Karachi Stock Exchange 30 indexes is to have a bench mark by which stock prices can be compared over the time period of time. Karachi stock exchange 30 index is calculated using free float market capitalization methodology. There are fifteen companies which are continuously included in the Karachi stock exchange 30 index during the period of five years (2005-2010).