The impact of capital structure on dividend policy: Evidence from Pakistan

This study investigates the impact of capital structure over dividend policy. For this purpose data of 40 companies of textile and cement sector listed at Pakistan stock exchange during the period of 2009 to 2014 was examined. Dividend pay-out ratio is taken as dependent variable and is used as a proxy for the dividend policy while debt-to-equity ratio, liquidity and profitability were used as independent variables; debt-to-equity ratio is used as a proxy for capital structure. Multivariate regression analysis shows that debt-to-equity ratio and dividend-pay-out ratio are negatively significant related to each other. Moreover it is found that liquidity and profitability are also significantly related to dividend-pay-out ratio.