The Impact Of Ownership Structure On Dividend Policy: Evidence From Listed Companies In Sri Lanka

DOI: 10.5176/2251-2012_QQE16.43

Authors: K.M.K.N.S.Kulathunga and A.A.Azeez

Abstract:

This study investigates the association between ownership structure types and dividend policy of listed companies in the Colombo Stock Exchange. A panel data are obtained from the annual reports of seventy seven companies over the period 2006-2014. The regression results indicate that ownership identity matter in determining the dividends. There is a negative association between institutional, managerial ownership structures and dividend policy and significant positive association between concentration ownership structures and dividend policy. The firm size, free cash flow, future growth opportunity variables are also matter for the dividend policy. The financial leverage is not an important variable in determining the dividend policy. The institutional, managerial and concentration owners behavior in Sri Lankan listed companies are aligned with the signaling, free cash flow and agency theory explanations for dividend payouts. The findings are useful to regulators for future direction in the Colombo Stock Exchange and investors to predict firms’ dividend payouts and valuation of their stocks.

Keywords: Dividend Policy, Institutional Ownership, Managerial Ownership, Concentration Ownership, Panel Data