The Determinants of Capital Structure and Dividend Policy: Empirical Evidence from the Kingdom of Saudi Arabia Market

  • Sherif El-Halaby Arab Open University, Kuwait and MSA University, Egypt
  • Mohammed Alzunaydi Business School, Plymouth University, UK
  • Mahmoud El-Ghazaly MSA University, Egypt
Keywords: Capital Structure; Dividends; Determinants; KSA.


This paper investigates the main determinants and interrelationship of dividend policy and capital structure in emerging markets, regard to the market of the Kingdom of Saudi Arabia (KSA). The practical analysis uses two models which are Ordinary Least Square (OLS) and Logistic Regression (LR). We examine 91 listed non-financial firms in the KSA stock market (Tadawal Stock Exchange) for the period between 2012 and 2016. With regard to the determinants of capital structure, the analysis found a positive association with size, but a negative association with liquidity, tangible assets and lagged dividends. Also, other variables like profitability; firm size; dividend pay-out ratio; rate of growth opportunities; and life cycle, are empirically found to be insignificant to determine the capital structure. With regard to dividend policy, logistic analysis found a significant association between profitability, growth opportunity and lagged dividends.   

Author Biographies

Sherif El-Halaby, Arab Open University, Kuwait and MSA University, Egypt

Dr. Sherif El-Halaby currently serves as a full-time faculty in the Arab Open University in Kuwait Branch. My BSc and MBA were from Cairo University. Dr Sherif finished MSc in accounting from Bradford University and PhD from Plymouth University in the UK. Dr Sherif published 10 papers in high ranking journals. He participated in more than 10 international conferences such as AAA and BAFA. Dr Sherif working before in different universities such as: October University for Modern Sciences and Arts (MSA University); Arab Academy for Science, Technology & Maritime Transport; Ahram Canadian University and Open Arab University- Egypt branch.  

Mohammed Alzunaydi, Business School, Plymouth University, UK

Mohammed Alzunaydi finshed his MSC in accounting and finance from the Plymouth Univeristy in the UK.   

Mahmoud El-Ghazaly, MSA University, Egypt

Dr. Mahmoud El-Ghazaly currently serves as a full-time faculty in the MSA University and School of Business at the American University in Cairo. Dr. Mahmoud holds Ph.D. in accounting from Sadat Academy for Managerial Sciences- Egypt, Master of Business Administration (MBA) from the American University in Cairo, Post-Graduate Diploma in Costing from Cairo University in Egypt, and Bachelor degree in accounting from Cairo University in Egypt.