Abstract:
Several theories have been documented on the relevance and irrelevance of firmperformance. Many authors continue to come up with different findings from their Studies on the relevance of firm performance. This research sought to establish the relationship between dividend payout and firm performance of listed banks in the Colombo stock exchange of Sri Lanka.Regression analysis was carried out to establish the relationship between dividendpayout and firm performance. The findings that firm performance was a major factor affecting dividend payout. Their relationship was also strong and positive. This therefore showed that firm performance was relevant. It can be concluded, based on the finding of this research that firm performance is relevant and that mangers should devote adequate time in designing a dividend policy that will enhance the shareholders' value.