Capital Structure Decisions and Dividend Policy

Abstract

This literature review delves into the relationship between capital structure decisions, dividend policy, and their impact on stock prices. By analyzing existing studies, it is evident that both factors play a crucial role in influencing the stock prices of companies. Some studies indicate that the equity ratio, gearing, and debt ratio do not significantly affect stock prices, emphasizing the need for a thoughtful and balanced approach to capital structure. Furthermore, the study highlights the significance of dividend per share. Consequently, companies should consider implementing a consistent and appealing dividend policy that aligns with their financial performance to positively influence stock performance and retain investor confidence.