DOI: 10.5176/2251-1997_AF19.248
Authors:Ms. B.A.Hirindu Kawshala
Abstract: The purpose of the study is to examine the relationship between corporate profitability and dividend payout. The study conducted as a panel sectional survey and utilized the sample frame of the microfinance companies in Sri Lanka. 10 companies were captured and the data was collected by means of structural equation modelling (SEM). Secondary data was collected using the financial statements of the sampled for the last five years. A Regression model was used to establish the linear relationship between two variables, that is, a dependent (Dividend decisions) and an independent variable (Profitability). The dividend policy was measured using the dividend payout while return on equity was used as a measure of profitability. Based on the study findings and discussion, the study concluded that there is a positive significant relationship between dividend policy and the profitability in microfinance companies in Sri Lanka (R = .711 & R2 = .704).
Practical and Research Implications A limitation of this paper is the period for which the data is sampled. The sample horizon for this study is short compared to other samples in the literature. To address this limitation, future research can increase the sample size. Originality/Value Several theories and models have been documented on the relevance and irrelevance of dividend policy. Hundreds of authors continue to come up with various conclusions with regard to dividend policy from their empirical studies. This research attempts to study the impact of dividend payout on corporate profitability in microfinance companies in Sri Lanka.
Keywords: Corporate Profitability, Microfinance, Dividend Policy, Sri Lanka
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