Abstract:
The presents study investigates the firm specific factors and dividend policy in the top
twenty best performing companies listed on the Colombo Stock Exchange. Twenty
listed companies are examined for a period of five years from 2007 to 2011.The
relationship between the from specific factors and dividend policy is examined with
the help of a multiple regression model. The firm specific factors arc firm size,
financial leverage, liquidity, profitability and previous payout ratio used as
independent variables to analyze the impact on dividend payout ratio. Five hypotheses
relating to the firm specific factors are developed and tested. The results revels that
firm size and financial leverage have a significant negative relationship with dividend
payout ratio while profitability has significant positive relation. On the other hand,
other selected variables found to have no impact on dividend payout ratio. The
findings imply that among the firm specific factors examined, profitability is the sole
determinant of the dividend policy of the top twenty best performing companies listed
on the Colombo Stock Exchange in Sri Lanka.
