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Does Dividend Policy Follow the Capital Structure Theory?

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  • Justyna Franc-Dabrowska

    (Warsaw University of Life Science, Poland)

Abstract

Decisions concerning the most optimal choice of financing sources and dividend policy are some of the most difficult financial decisions. This article presents the results of research concerning relationships between two capital structure theories (hierarchy theory and substitution theory) and dividend payment policies in Polish stock companies of the agricultural and foodstuff sector (2001–2006). The research hypothesis was verified positively; company management limits dividend payment according to the hierarchy theory and prefers internal sources of financing economic activities. In order to verify the hypothesis, the methods of descriptive analysis, financial analysis and descriptive statistics were applied, together with a fixed effects model.

Suggested Citation

  • Justyna Franc-Dabrowska, 2009. "Does Dividend Policy Follow the Capital Structure Theory?," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 7(4), pages 367-382.
  • Handle: RePEc:mgt:youmgt:v:7:y:2009:i:4:p:367-382
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    File URL: http://www.fm-kp.si/zalozba/ISSN/1581-6311/7_367-382.pdf
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    References listed on IDEAS

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    1. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    2. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. repec:kap:iaecre:v:13:y:2007:i:4:p:495-514 is not listed on IDEAS
    5. Poterba, James M & Summers, Lawrence H, 1984. " New Evidence that Taxes Affect the Valuation of Dividends," Journal of Finance, American Finance Association, vol. 39(5), pages 1397-1415, December.
    6. Ian D. McManus & Owain ap Gwilym & Stephen H. Thomas, 2006. "Payment history, past returns and the performance of UK zero dividend stocks," Managerial Finance, Emerald Group Publishing, vol. 32(6), pages 518-536.
    7. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    8. Isabelle Huault & V. Perret & S. Charreire-Petit, 2007. "Management," Post-Print halshs-00337676, HAL.
    9. Pierre Erasmus & Retha Scheepers, 2008. "The Relationship Between Entrepreneurial Intensity and Shareholder Value Creation," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 6(3), pages 229-256.
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    1. repec:prg:jnlcbr:v:2017:y:2017:i:1:id:173:p:61-75 is not listed on IDEAS

    More about this item

    Keywords

    dividend policy; hierarchy theory; substitution theory; stock companies; model fixed effects;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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