Abstract:
This study examines the impact of dividend policy indicators, dividend payout
ratio and dividend yield, on the market price of a share of the companies
operating in the banking, financing, insurance, and leasing industries in Sri
Lanka. The study was carried out using 5 year data from 2010 to 2014 obtained
from the annual reports of sample of 20 listed companies in the financial
sector. From the data analysis, it is found that the dividend payouts ratios have
weakly and positively correlated with share price indices, and dividend yields
have weakly and negatively associated. The dividend payout ratio and
dividend yield have an insignificant impact on the market price of shares of
the companies in the industries. Hence, it is concluded that the dividend policy
has no significant influence on determining the market value of shares of
companies in the banking, financing, insurance, and leasing industries in Sri
Lanka.
