Capital Structure on Dividend Policy: Is There Any Relationship?

Samuel Tabot Enow
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Samuel Tabot Enow: Research Associate, The IIE VEGA School, South Africa.

International Journal of Economics and Financial Issues, 2023, vol. 13, issue 3, 141-144

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

Keywords: Capital structure; dividend policy; Kolmogorov-Smirnov test; Chi-square test (search for similar items in EconPapers)
JEL-codes: G1 G2 G4 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2023-03-14

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