Abstract:
The research analyses the share price performance of companies between the periods immediately prior and
post their announcing of dividend announcement to have a better understanding of the relationship between
dividend announcement and share price performance, which will be critical for every listed company. The
impact of dividend was uncovered with the help of two variables; Actual Stock Return and the market return.
The date of company announcements and daily share prices were extracted from Colombo Stock Exchange
(CSE) data library. Data includes observations from 2016 January to 2018 June. The research method was
event study method. According to the research findings, there is a positive significant impact from dividend
announcements on share price performance in Sri Lankan listed companies. The contemporary existing
ideology of positive impact between dividend announcement and Share Price in Sri Lankan financial market
could be re-confirmed through the finding. As the practical implication of the research, strategic decision makers
may utilize the findings to ascertain equilibrium for profit distribution through dividends and retain
profit for future investments in order to derive short term and long-term growth of the entity.