1. IntroductionDividend policy for a company means whether to pay or not; whether to pay in cash, stock or both cash and stock and how often to pay. Why do companies distribute cash dividends when they see their profits falling? Why not share buybacks? Why not a stock dividend? To examine this research question, the research will evaluate firms' cash dividend distribution behavior in light of different ownership structures subject to trade restrictions. Companies listed on the Karachi Stock Exchange (KSE) were chosen to evaluate the problem. The KSE is a developing market in the region without a strong regulatory framework. There is a shortage of management talent in publicly traded companies. It is therefore reasonable to say that, compared to companies listed in the developed markets of the United States and Europe, companies listed on the KSE generally do not observe good corporate governance practices. Furthermore, to protect shareholders from the adverse effects of non-tradable shares held by directors and their spouses, financial institutions and external blockholders, good corporate governance is necessary. This study only includes poorly performing firms to reduce the signaling effects of cash dividends. (John and Williams (1985); Miller and Rock (1985)) and will focus on the effect of corporate governance through the channeling of cash into the payment of dividends. Whenever a company's earnings fall, paying out cash dividends does not contribute to long-term earnings growth. The advantage of using poorly performing firms for the study will be to reduce and neutralize the signaling effects of future earnings growth through the payment of cash dividends by the high performing firms (Benartzi, Michaely and Thaler (1997) and DeAngelo, DeAngelo,….. middle of paper......1 Fin_ins + β2 FCF_Assets + β3 EPS + β4Dt_Assets + β5 ROA + β6 Size + εit (1b)CDiv_Assets = α + β1 Block_own + β2 FCF_Assets + β3 EPS + β4 Dt_Assets + β5 ROA + β6 Size + εit (1c)CDiv_Assets = α + β1 Non-negotiable + β2 FCF_Assets + β3 EPS + β4 Dt_Assets + β5 ROA + β6 Size + εit (1d)In the regression models, we have four key independent variables i.e. Director Ownership, Financial Institution Ownership, Blockholder Ownership and Non-Tradable Shares to examine the relationship with the dependent variable are Cash to Asset Ratio. There are other variables that also affect a company's cash dividend distribution behavior. Indeed, the study includes these variables in the model. The control variables are debt-to-assets ratio, free cash flow per share, free cash flow to assets, earnings per share, firm size, and return on assets...