Capital Structure and Survival Dynamic of Business Organisation: The Dividend Approach
Journal of Finance and Accounting
Volume 2, Issue 2, March 2014, Pages: 20-23
Received: Oct. 1, 2013; Published: Mar. 20, 2014
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Author
Kehinde, James Sunday, Department of Accounting and Finance Faculty of Management Science Lagos State University, Ojo
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Abstract
The capital structure of firms count in the determination of the financial risk of the firm a firm night be making good net profit before tax but might have less to distribute to the shareholders after the payment I of tax when compared with a similar firm in the same industries due to poor capital structure arrangement thus payment of low return to share holders most times is due to poor capital structure rather than to poor business return. In this study the return is the dividend paid to the shareholders. Secondary data was used for the study, collected from the financial report of the firm. The simple multiple linear regressions was applied for the study and the asymptotic probability and the t-statistic were adopted for the study the result of the study revealed that capital structure of the firm do not satisfied the optimal capital structure status of the Modigliani and Milan the firm for the period covered is mostly financed by equity and have a near zero debt finance a low relationship also exist between equity-debt finance of the firm and dividend of the firm. It was recommended that the firm should introduce debt finance to the capital structure of the firm to enjoy the tax advantage of debt finance.
Keywords
Dividend, Capital structure, Debt, Equity
To cite this article
Kehinde, James Sunday, Capital Structure and Survival Dynamic of Business Organisation: The Dividend Approach, Journal of Finance and Accounting. Vol. 2, No. 2, 2014, pp. 20-23. doi: 10.11648/j.jfa.20140202.11
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