African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4157

Full Length Research Paper

Does capital structure influence payout? A study on KSE -30 Index

Abdul Jabbar Kasim
  • Abdul Jabbar Kasim
  • Department of Commercial & Professional Studies, Institute of Business Management, Karachi.
  • Google Scholar
Muhammad Ajaz Rasheed
  • Muhammad Ajaz Rasheed
  • Department of Economics, Institute of Business Management, Karachi.
  • Google Scholar

  •  Received: 07 July 2014
  •  Accepted: 10 February 2015
  •  Published: 28 February 2015


The paper aims to provide an insight into underlying factors which a given mix of owners’ funds and outside funds have on the payout of KSE 30 Index. Capital structure comprises equity and borrowed funds (debt) that listed companies need to carry out their business operations. We have applied panel data methodology on twenty-one KSE-30 companies for the period of 2001-2011. Our results show that high proportion of owners’ capital in capital structure of the firm and Return on Equity results in higher payout.  Companies, depending on where they stand on the growth curve, likely use funds firstly for opportunities of capital investment required for growth and thereafter if sufficient funds permit make decision for a payout. As a result, payout can only emerge if out of the residual leftover there is a sufficient cash-flow to distribute as dividend.


Key words: Capital Structure, Gearing, Tax shield, Debt financing, Equity Financing, Dividend payout, Investment, Long-term finance, Internal funds, KSE-30