Abstract:
The dividend policy of a firm is considered as a crucial decision among
the management of the organizations. Therefore, the study developed to
find out the impact of dividend policy on return on assets of the non financial firms listed in Sri Lanka, using a randomly selected sample of
100 firms listed in the Colombo Stock Exchange for the period from 2013
to 2017. To test the hypothesis, the study incorporated dividend pay-out
ratio, dividend per share as independent variables, sales growth, leverage
as a control variable, and return on assets as a dependent variable.
Initially the unit root test is carried out to test the stationary of the data
set. Descriptive statistics, correlation analysis, and pooled OLS were
carried out as research techniques and found that dividend per share
significantly impacts on return on assets, and the other hand dividend
pay-out ratio does not significantly impact on return on assets of the non
– financial firms listed in Sri Lanka. The results suggest that the dividend
decisions significantly contribute towards the profitability and therefore,
considerable attention is required over the dividend decisions of the
organizations and this should be revaluated to serve the investor’s
potential expectations.
