Title: Dividend policy and capital structure: an empirical application in the Portuguese corporate context

Authors: Mario Gomes Augusto, Joao Verissimo Lisboa, Elisio Fernando Brandao

Addresses: School of Economics, Institute of Systems and Robotics – Coimbra, University of Coimbra, Avenida Dias da Silva, 165, 3004-512 Coimbra – Portugal. ' School of Economics, Institute of Systems and Robotics – Coimbra, University of Coimbra, Avenida Dias da Silva, 165, 3004-512 Coimbra – Portugal. ' University of Porto, School of Economics, Rua Roberto Frias, 4200-464 Porto – Portugal

Abstract: This study provides new evidence for the interdependency between capital structure and dividend policies, considering investment as a decision variable and taking into account a number of corporate attributes that may have the potential to influence these decisions. The methodology used in this study recognises that each financial decision is a function of those which remain and all such decisions are affected by a group of the firm|s attributes. The methodology used allows the quantification of direct, indirect, and total effects among the attributes of the firms and the financial decisions. This offers new insights into some of the contradictory results found in previously published research. Using a sample of 623 Portuguese companies, this study finds evidence that the interactions of financial decisions are dependent on the firms| attributes. It also shows, explicitly, the direct, indirect and total effects of the different attributes of the company on those decisions.

Keywords: dividends; capital structure; Portugal; dividend policies; interdependency; investments; decision variables; corporate attributes; financial decisions; quantification; direct effects; indirect effects; total effects; interactions; decision sciences; risk management.

DOI: 10.1504/IJDSRM.2011.040745

International Journal of Decision Sciences, Risk and Management, 2011 Vol.3 No.1/2, pp.2 - 31

Published online: 20 Jun 2011 *

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