THE IMPACT OF BOARD CHARACTERISTICS ON DIVIDEND POLICY: EVIDENCE FROM MANUFACTURING SECTOR OF COLOMBO STOCK EXCHANGE

Abstract

Finance scholars motivate to seek answers for the query on payment of Dividends by companies and the affecting factors for the payment of Dividends was majorly due to the prevailing issue of problem of Dividends since 1950s. The study is based to how one of the main components of corporate governance, which is the Board characteristics, has influenced dividend policy. The data for this paper was gathered Manufacturing sector companies in Colombo Stock Exchange taking the last 5-year figures as a base. Dividend Decision and Dividend payout were taken into reflection for the measurement of Dividend policy. And the three analytical strategies of Descriptive Statistics, Binary Logistic Regression and Panel Regression were taken as tools of analysis. Descriptive statistics were used to understand the nature of board characteristics in Banking and Finance sector of Sri Lanka. The effect on Board characteristics on dividend decision was expansively defined in Binary Logistic regression. The effect on level of dividend payout through Board characteristics were discussed through Panel Regression.