International Journal of Advance Study and Research Work (2581-5997)/ Volume 1/Issue 4/July 2018 1 © 2018, IJASRW, All right reserved http://www.ijasrw.com Impact of Dividend Policy on Firm Performance: (Evidence from the Manufacturing firms in Pakistan) M. Mohsin Hafeez, Sadia Shahbaz, Iqra Iftikhar, Hamid Ali Butt Department of Management Sciences, University of Gujrat, Sub-Campus Narowal DOI: 10.5281/zenodo.1312180 Abstract: The basic resolution of this study is to investigate the relationship between dividend policy and firm performance. Design/methodology-the sample contain on 15 manufacturing companies in the year of 2014 to 2017.time series data were calculated from the financial statement of the selected manufacturing firms. Return on asset (ROA) and return on equity (ROE) were used as dependent variables while dividend payout ratio (DPOR), earning per share (EPS), price earnings ratio (PER) were modeled as independent variables. Multiple regressions like correlation, descriptive were used as data analysis techniques. Findings reveal that all the independent variable have a positive relationship with dependent variables. Dividend payout ratio, earning per share, price earnings ratio positively influence return on investment. Limitation of our study is that we examine only 15 manufacturing firms other researcher use large size sample and other sector firms expect manufacture. Keyword: Dividend policy, Performance, Dividend payout ratio, Price earnings ratio, Returns on the asset. Introduction: The purpose of this research is to investigate the impact of dividend policy on the firm's performance from manufacturing firms in Pakistan. dividend policy becomes the very important issue in the business field.in Pakistan firm, dividend policy creating many issues in the capital market.in recent decades many economists have analyzed the dividend policy. Black (1976) stated that "the harder we look at the dividend picture, the more it seems like a puzzle, with pieces that don't fit together". But the dividend policy also affects the firm profitability. Dividend policy is the declaration of dividend payment to a shareholder. Dividend refers to the distribution of profit to their owners. The dividend also the benefit of a shareholder as a result of their risk.it is the decision of management to set the portion of profit that provides the shareholder according to their investment. Dividend policy is a small factor that describes the firm’s performance.in finance dividend distribution decision is one most important area in four elements. In Pakistan prudence and globalization well organized fast success in it provide know-how in firm intently. In the modern area firm demand to raise more innovation. Basically, it is essential for firms to formulate the dividend policy to improve the performance of a firm. Through dividend, the framework optimizes the power of the firm's progress . The dividend can exploit cut down the size of agency cost. The dividend may be classified in. (1) counsel (2) surplus. Administer trusted that dividend policy is a significant impact and directly affect the value of a share. The most advantageous policy decreased the overused of price and that provide guidance to decreased the shareholder's estate. The domination of dividend effects the caliber of the firm and transformed into (blow of stream) sermonized functioning by Modigliani and Miller. That conferred the aspect of a firm's field of vision inappropriate its policy contrasted the bring home efficacy. The shareholders are hard-hearted in acquiring available sources like dividend or other gains an excellent market. Agency theory suggested by Jonson and Mackling (1976). The conductor perhaps inadequate to enlarge shareholder's abundance as long as no- accompaniment constitution of applicability affair and objective discrepancy. Jenson contends in case that comprehensive allotment of profit indemnified the dividend can improve the assessment of the firm as a result of authorizing deficient free of cost capital gains held by the managers. Dividend policy indicates association appointment as long as the dividend is famous beneficial for business adherence along with enduring circumstances scrutiny of firms.