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The effect of capital structure on dividends payout: the case of selected banks in South Africa
Author(s)
Assom Fils, Marc Laudel
Date Issued
2019
Type
Thesis
Publisher
Cape Peninsula University of Technology
Abstract
The purpose of this study was to determine whether Banks operating in South Africa are
paying dividends from changes in their capital structure. This study was motivated by prior
literature which revealed that South African banks paid dividends from fair value revaluation.
The multiple regression analysis was used to examine the nexus between debt-to-equity
ratio, debt ratio and dividend pay-out. Data collected from audited financial statements over
a period of eightyears wasanalysed using a statistical package for the social science
software.
The empirical findings of this research indicated that in four of the five banks under
investigation, there is no statistically significant relationship between dividend pay-out and
debt ratios. Similarly, no significant relationship was found between dividend pay-out and
debt-to-equity ratios. The aforementioned results imply that most South African banks are
not paying dividends to their shareholders by altering their capital structure. . However, in
one particular instance, the study results revealed that dividend payout is positively
associated with capital structure indicators.
The findings of this study confirmed the position of the DividendPayout Ratio theory which
states that dividend payouts should be from profits and should be paid only after the firm has
invested in all possible profitable projects.
paying dividends from changes in their capital structure. This study was motivated by prior
literature which revealed that South African banks paid dividends from fair value revaluation.
The multiple regression analysis was used to examine the nexus between debt-to-equity
ratio, debt ratio and dividend pay-out. Data collected from audited financial statements over
a period of eightyears wasanalysed using a statistical package for the social science
software.
The empirical findings of this research indicated that in four of the five banks under
investigation, there is no statistically significant relationship between dividend pay-out and
debt ratios. Similarly, no significant relationship was found between dividend pay-out and
debt-to-equity ratios. The aforementioned results imply that most South African banks are
not paying dividends to their shareholders by altering their capital structure. . However, in
one particular instance, the study results revealed that dividend payout is positively
associated with capital structure indicators.
The findings of this study confirmed the position of the DividendPayout Ratio theory which
states that dividend payouts should be from profits and should be paid only after the firm has
invested in all possible profitable projects.
Additional information
Thesis (MTech (Business Administration))--Cape Peninsula University of Technology, 2019
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