Purpose - The aim of this empirical examination is to identify the determinants that influence the common stock prices variations of financial sector firms to testify whether the financial policy decisions drive the plausible explanations for stock prices volatility. Design/methodology/approach – The study proposed the common stock price modelling and dividend irrelevancy theory in order to capitalize the testable hypothesis related to the attributes of common stock prices in financial sector. The data estimation employs three models (i.e., pooled OLS, random-effect and fixed-effect GLS) using the unbalanced panel regression method for 44 companies in the Pakistan Stock Exchange from 2000Q1-2019Q4. Findings – The results testify that the outcome of common stock prices is consistent with empirical evidence of dividend irrelevance theory, with the support of irrelevancy theory earnings per share (EPS) and capital structure decisions adversely influence the value of common stock market prices. Equity market value induces significantly effects and market-book value (growth-oriented stocks) has insignificant influence on common stock prices, respectively. However, considering the impact of retained earnings decisions are not predicting the reliable prices of common stocks. These findings suggest that the financial decision policy plausible inferences help in predicting the value of common stock market prices of Pakistani financial sector firms. Practical Implications – The research provides an empirical support for investors and financial institutions /management in capturing the investment prospects of financial firm’s stock prices with changes in financial policy decisions to develop an integrated investment framework. Originality/Value – The paper contributes to the common stock prices variations literature by integrating the financial policy decisions of financial firms and how it effects on the value of stock prices for longer period. The study adds new evidence to the applicability of predicting stock prices while investigating firm level determinants.