Abstract:
The study aimed to emphasize the determinants of dividend policy in Sri
Lankan firms. This study was conducted with 80 non - financial companies
which were listed on Colombo Stock Exchange (CSE). The empirical
research was focused on panel data analysis, and data was collected from
annual reports for a five year period from 2013 to 2017. This study explored
selected factors that influence dividend policy, including sales growth,
leverage, firm size, profitability, EPS, liquidity, and risk. The panel data
analysis employed pooled OLS, fixed - effect, and random - effect models.
Based on the analysis, the fixed - effect model was thought to be the best fit
for studying the factors that affect dividend policy. According to the outcome
of fixed-effect model, among the seven input variables considered in this
study, profitability, EPS, and risk were negatively linked to dividend policy.
However, no significant relationship was found between dividend policy
and sales growth, leverage, firm size, or liquidity. The findings contribute
to the understanding that three parameters namely: profitability, EPS, and
risk have been recognized as factors affecting dividend payouts in CSE’s
listed companies. Hence, policymakers will be able to concentrate on the
factors that influence shareholder wealth maximization.
