The Impact of Capital Structure and Dividend Policy on Firm Performance: A Cross Cultural Study

90 Pages Posted: 21 Jul 2020

See all articles by Muhammad Zahid

Muhammad Zahid

Barani Institute of Management Sciences (BIMS)

Date Written: June 29, 2020


This study is basically the impact of corporate finance on the firm performance. Two major pillars of the corporate finance are taken into the consideration for measurement of the corporate finance impact on firm performance. This concluded the results by judging the impact of capital structure and the dividend policy on firm performance. This study is cross sectional and cross cultural. South Asian countries have been taken into consideration as population and sample has been taken from manufacturing and food sectors of PSE, BSE, DSE and CSE. Overall 187 companies of four countries have been examined during the study. Panel data regression model is used to conclude the results. We have selected 6 manufacturing sectors for estimation and conclusion covering a time span of 10 years from 2007-2016. Two ratios of firm financial performance are considered to measure the impacts. Two ratios each for measurement of capital structure and dividend policy have been taken as proxies. Our results have shown highly positive impact of dividend policy on firm performance where capital structure has shown highly but negative impact on firm performance. Future research gap has also given on sector, region and variables classification. Recommendations on the basis of conclusions are also given for investors to invest in dividend paying firms, researchers to more deeply dig dividend policy and governments for new legislation's.

Keywords: Corporate Finance, Firm Performance, Dividend Policy, Capital Structure, South Asian Countries

JEL Classification: G11

Suggested Citation

Zahid, Muhammad, The Impact of Capital Structure and Dividend Policy on Firm Performance: A Cross Cultural Study (June 29, 2020). Available at SSRN: or

Muhammad Zahid (Contact Author)

Barani Institute of Management Sciences (BIMS) ( email )


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