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Capital Structure on Dividend Policy: Is There Any Relationship?

Author

Listed:
  • Samuel Tabot Enow

    (Research Associate, The IIE VEGA School, South Africa.)

Abstract

Dividend pay-out policies often emanate from complex financial decisions and corporate managers do not consider dividend policies in isolation. However, some studies have indicated that capital structure significantly affects dividend pay-out and should be managed properly as it accounts for variations in dividends. The aim of this study was to investigate the relationship between capital structure and dividend pay-out. This study made use of a Kolmogorov-Smirnov and a Chi-square test. These tests are more reliable in investigating the variations and dependency between variables and are a leap from the models used in the prior literature. Using the R-square values of six published articles, the results revealed that capital structure cannot be used to explain variations in dividend pay-out as suggested by some authors. The implications of this study are that academic journals should scrutinise journal manuscripts where there are suggestions that there is a relationship between capital structure and dividend policy

Suggested Citation

  • Samuel Tabot Enow, 2023. "Capital Structure on Dividend Policy: Is There Any Relationship?," International Journal of Economics and Financial Issues, Econjournals, vol. 13(3), pages 141-144, May.
    • Handle: RePEc:eco:journ1:2023-03-14
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    References listed on IDEAS

    as
    1. Matthew Adeolu Abata & Stephen Oseko Migiro & Joseph Olorunfemi Akande & Raredzo Layton, 2017. "Does Capital Structure Impact on the Performance of South African Listed Firms?," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 13(6), pages 334-350, DECEMBER.
    2. Husam RJOUB & Irfan CIVCIR & Nil Gunsel RESATOGLU, 2017. "Micro and Macroeconomic Determinants of Stock Prices: The Case of Turkish Banking Sector," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 150-166, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Capital structure; dividend policy; Kolmogorov-Smirnov test; Chi-square test;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G4 - Financial Economics - - Behavioral Finance

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