Abstract:
The primary purpose of the study is to examine the impact of dividend policy
on financial performance of companies in Sri Lanka. This study has selected
twenty listed hotel and travelling companies in the Colombo Stock Exchange
(CSE) to the sample from the listed hotel and travelling companies in the CSE
on random basis. Secondary data were used to the study and the dividend and
performance related data were gathered through annual reports of hotels and
travel companies for the period of 2010 to 2015. Net Operating Cash Flow
(NOCF), Book Value of Equity (BVE), Price Earnings Ratio (PER) and
Dividend Payout Ratio (DPR) were selected as independent variables.
Dependent variable of the study is Financial Performance, which measures by
using Return on Assets (ROA). Descriptive statistics, Correlation analysis and
Regression analysis were applied for analyzing data. The results reviewed that
dividend payout is significantly correlate with the ROA. However, NOCF,
BVOE and PER is correlated with ROA. The regression results show that all
the independent variables have a significant impact on ROA. Study found that
regular dividend policy and irregular dividend policy affect to the financial
performance. Finally, the study represented, that dividend policy affects to the
financial performance of hotel and travelling companies listed on CSE in Sri
Lanka.
