Abstract:
The board structure and ownership structure are the basic components of corporate
governance system describing the characteristics of the board of directors and
shareholders respectively due to that they are the decision-makers of a corporation.
‘However, they are more involved in dividend decisions making than other corporate
decisions siriée shareholders are interested to receive sufficient level of dividends for
theirs’ investment while directors use the company money for theirs’ personal
benefits throughout minimizing the dividend payment. Thus, the main aim of the
study was to investigate the impact of board structure and ownership structure on
corporate dividend policies in Sri Lanka. The study was obtained data of listed
seventy non-financial companies over the period of 2011 to 2015. The board structure
was represented by board size, board independence, CEO duality, and board meeting
while institutional ownership, managerial ownership, foreign ownership, and
ownership concentration were represented the ownership structure. In addition to that,
firm size, profitability (ROE) and previous year’s dividend per share were selected as
moderating variables. The dividend per share was used as a proxy of dividend policy.
The fixed effect panel regression model was selected for all six regression equations
formulated to assess the objectives of the study. The findings revealed that board
structure had a significant impact on dividend policies while ownership structure had
an insignificant impact on dividend policies of non-financial companies in Sri Lanka.
The study was concluded that when the board has independent directors at least two
or one-third of total directors and separation of the role of CEO and Chairman, nonfinancial companies in Sri Lanka increase dividend payments with an increase of net
earnings and previous year’s dividend payments and vice versa. The findings are
useful to policymakers and regulators to reassess and revise corporate governance’s
legislations, management body to understand the corporate governance quality status
and-investors-to select the best suit stocks in building their portfolio.
