Abstract:
This study is seeks to examine the determinants of dividend
payout ratios of listed companies in Colombo Stock Exchange (CSE) Sri
Lanka. In this paper, Researcher has used Lintner dividend model and its
extended versions for analysis of dividend determinates. Growth in sales,
earnings per share, price earnings ratio, market value to book value, cash
flow, leverage, liquidity and return on assets are used as independent
variables while dividend payout is the dependent variable. The analyses are
performed using data derived from the financial statements of twenty eight
listed companies of Colombo Stock Exchange (CSE) during the period of
2010/2011. The present study used the correlation coefficient to identify the
relationship between variables and linear regression to find out the
associations between determinants and the dividend payout. It is found that
only 37.20% of dividend payout can be explained by determinants variables.
Through multiple correlation analysis it is found 60.99% correlation between
dividend payout and the defined determinants variables. On the other hand
considering individually there is a positive relationship between dividend
payout ratios and growth in sales (GS), earning per share (EPS), market to
book value (MB), liquidity (LIQ) and return on asset (ROA). And also show
negative relationship between dividend payout ratio and price earnings ratio
(P/E), Cash flow (CF), and leverage (LEV). The main value of this study is
the identification of the factors that influence the dividend payout policy
decisions of listed firms in Sri Lanka.
