Debt Capital and Dividend Policy as Complementary Indicators of Firm Valuation

This study investigates the relationship between debt capital and dividend policy as complimentary indices of firm valuation in corporations listed on the Korea Composite Stock Price Index. Using Tobin's Q as a proxy for firm value and employing Ordinary Least Squares (OLS), Two-Stage Least Squares (2-SLS), and GMM regression techniques, the analysis exposes how debt capital and dividend policies diminish firm value independently but have a synergistic effect upon interaction. Ownership structure, particularly Chaebol affiliation, lowers company value in isolation but moderates the detrimental effects of these financial practices. Further results emphasize the negative impact of firm size and the favorable impact of free cash flow on firm valuation. These findings contribute to the corporate finance literature by expanding our understanding of capital structure, dividend payout strategies, and ownership structure relationships. The study also provides actionable insight for corporate managers, investors, and policymakers. It underlines the significance of balanced fiscal practices and governance reforms customized for markets with concentrated ownership configurations.