This study examines how dividend policy and capital structure affect non-financial firms’ performance (operational, financial, and market) listed on the EGX.
The data were collected from 68 firms in different sectors from 2014 to 2022 over nine years. The findings indicate that the impact of dividend policy on firm performance depends on the firm’s capital structure. For firms with higher debt-to-equity ratios, paying higher dividends per share can be beneficial as it signals their financial strength and reduces agency costs. However, for firms with lower debt-to-equity ratios, paying higher dividends per share can reduce their profitability and return on equity. The study’s findings have implications for stakeholders in the Egyptian stock market. Managers of firms with higher debt-to-equity ratios may want to consider increasing their dividend payouts to signal their financial strength and reduce agency costs. Investors should consider investing in firms with higher dividend payouts, as these firms are more financially stable and have lower agency costs.
Researcher: Dr. Husam Sharawi