Abstract:
This study mainly analyses the determinants of dividend decisions of firms listed in
Colombo Stock Exchange (CSE) Sri Lanka. The research involved sixteen companies listed
in Colombo Stock Exchange (CSE) and selected data for the period of ten years from 2006
to 2015 for the purpose. The Panel Data regression model is used to test the theoretical
relationship between the dividend pay-out and selected fundamental factors. The research
found that the profitability, liquidity, leverage, growth and size are some key determinants
of the dividend decisions in manufacturing companies in Sri Lanka. The results suggested
that more profitable and high liquid manufacturing companies pay more dividends while
manufacturing companies with high growth opportunities tend to pay lower dividends.
Also, the study clearly showed that profitability, liquidity and size were the three most
important factors affecting dividend policy of manufacturing companies in Sri Lanka.
