Determinants of Dividend Policy in Sri Lanka: The Panel Data Analysis

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. Keywords: profitability, EPS, risk, dividend payout

Determinants of Dividend Policy: The Case of the Casablanca Stock Exchange

“…They found that profitability and firm size are significant determinants and they both show a positive correlation with dividend policy. Kengatharan (2021) studied dividend policy determinants in Sri Lanka during the period 2013 to 2017. His research revealed that profitability, risk and earnings per share present a negative correlation with dividend policy.…”

Rasio Profitabilitas, Likuiditas, Leverage dan Dividend Payout Ratio

“…Penelitian lainnya yang mendukung pernyataan tersebut yakni Martha & Juliani (2018), Putri et al, (2018), Fadillah & Eforis (2020), dan Manaf et al, (2021). Akan tetapi, terdapat bukti empiris lain yang menunjukkan hasil yang sebaliknya yakni profitabilitas justru memiliki pengaruh negatif terhadap kebijakan pembayaran dividen yakni penelitian oleh Yusuf & Rahmawati (2016), Ogundajo et al, (2019), dan Kengatharan (2021). Manaf et al, (2021) menguji aspek-aspek pemicu pembayaran dividen pada industri baja di Malaysia.…”

“…Kebijakan pembayaran dividen harus didukung dengan ketersediaan aset lancar (kas) yang cukup guna pembayaran dividen tersebut. Pada penelitian Nehe et al, (2021), likuiditas memiliki pengaruh negatif dan pada beberapa penelitian lainnya justru memberikan pengaruh (Arsyad et al, 2021;Fadillah & Eforis, 2020;Herawati & Fauzia, 2018;Jackson & Laksmiwati, 2021;Kengatharan, 2021;Lie & Osesoga, 2020;Martha & Juliani, 2018;Rahmadi, 2020;Tahir & Mushtaq, 2016) Aspek lain pendorong kebijakan pembayaran dividen yakni rasio leverage. Tidak mudah bagi entitas dengan leverage yang tinggi untuk memutuskan apakah akan mendistribusikan dividen atau tidak kepada pemilik.…”

“…Hasil riset menguatkan riset sebelumnya yang dilakukan oleh Fadillah & Eforis (2020), Handayani et al, (2022), Martha & Juliani (2018), dan Putri et al, (2018). Hasil riset tidak mendukung penelitian Kengatharan (2021), Ogundajo et al, (2019), dan Yusuf & Rahmawati (2016) yang menunjukkan bahwa aspek profitabilitas memberikan pengaruh negatif terhadap DPR (dividen Payout Ratio).…”

Impact of External Debt and Financial Integrity Management on Economic Growth in Developing Countries: Evidence from the MMQR Approach

“…In addition, a better level of financial integrity also indicates that a government can achieve its economic policies, which accelerate the overall economic progress through better use of public funds (Combes et al,2019;Ortega, Sanjuán & Casquero, 2019). Moreover, governments' efficiency in domestic and international fund transactions can positively affect monetary activities, removing obstacles to fund leakage from the illicit leakage and helping in achieving economic goals (Bashi et al, 2022;Kengatharan, 2021).…”