Dividend Policy and Firm Performance: Evidence from the Manufacturing Companies Listed on the Colombo Stock Exchange

Prof. T.Velnampy, Mr. P.Nimalthasan, Miss. K.Kalaiarasi

Volume 14 Issue 6

Global Journal of Management and Business

Purpose: The main thrust of this study is to find out the relationship between dividend policy and firm performance of listed manufacturing companies in Sri Lanka. Design: A set of listed manufacturing companies have been investigated to using the data representing the periods of 2008 – 2012.Returns on equity and return on assets were used as the determinants of firm performance whereas dividend payout and earnings per share were used as the measures of dividend policy. The statistical tests were used includes: descriptive statistics, correlation and regression analyses. Findings: The study found that determinants of dividend policy are not correlated to the firm performance measures of the organization. Regression model showed that dividend policy don’t affect companies’ ROE and ROA. Further recomm-endations are also put forwarded in the research. Research Limitations: The study only used data from the 2008-2012 annual reports. However, the findings have highlighted the effects of the firm performance and dividend policy. Originality: The study contributes to literature in Sri Lanka. Furthermore, the finding of the paper can be considered as helpful for managers and users that are anxious to develop financial description quality and practices of dividend policy.