International Journal of Business and Society, Vol. 22 No.

1, 2021, 227-239

DIVIDEND POLICY AND SHARE PRICE VOLATILITY:

EVIDENCE FROM LISTED NON-FINANCIAL FIRMS IN
SRI LANKA

Lingesiya Kengatharan
University of Jaffna

Jeyan Suganya Dimon Ford

University of Jaffna

ABSTRACT

The prime objective of this research is to investigate the impact of dividend policy on share price volatility
in Colombo Stock Exchange (CSE). A sample of 81 listed non -financial firms from CSE in Sri Lanka is
examined using panel data analysis for a five years period from 2013 to 2017. Dividend policy of the firms
has been measured by dividend pay-out, dividend yield and dividend per share and which are explanatory
variables of the study after controlling for firm size and financial leverage. According to the random effect
regression analysis, only 25% of the movements in share prices are explained by the explanatory variables
considered in this study. Dividend yield shows significant positive impact on share price volatility whereas
dividend per share shows the significant negative impact on share price movements. Firm size illustrates
significant negative influence on share price volatility by indicating large size of companies share price
volatility is high. But, dividend pay-out and financial leverage are not significantly persuaded on share price
volatility in this study. Therefore, it is concluded that dividend yield, dividend per share and firm size have
significant impact on price volatility in Sri Lankan context and findings of the study are in line with the
dividend relevance theory. Dividend policy can be considered as the protective mechanism to maintain
share price volatility in order to enhance the shareholders wealth.

Keywords: Dividend Payout, Dividend Yield, Dividend Per Share, Share Price Volatility.
___________________________________
Received: 24 October 2019
Accepted: 31 December 2020
https://doi.org/10.33736/ijbs.3172.2021

1. INTRODUCTION

Primary aim of profitable organisations which is maximization of shareholders’ wealth does not
rely on only one particular decision. It will be accomplished with four types of most important
financial decisions such as investment decision, financing decision, dividend decision and
working capital management decision. This study mainly focuses on dividend decision as it is
considered as major factor to examine share price volatility of a company. Shareholders’ wealth
directly relates to value of the firm measured using market price of share. Share price movement
will either be bullish (up) or be bearish (down) trend this is called volatility of share price. Even


Corresponding Author: Department of Financial Management, University of Jaffna, Sri Lanka; Tel: +94764014277; Email:
[email protected]
228 Dividend Policy and Share Price Volatility: Evidence from Listed Non-Financial Firms in Sri Lanka

though it would be determined by many factors, foremost, share price is depending on demand
and supply of a particular share in the market. It mainly relies on percentage of dividend
provided by a particular firm as investors invest their money in shares of a firm with the
expectation of getting higher return on their investment. Firms usually keep part of their earning
as retained earnings for various purposes and rest of the earnings will be provided as dividend to
the shareholders. Therefore, investors will prefer shares of the firm which is providing dividend
at higher percentage to earn more. Since higher risk is associated with higher return, investors
who are expecting higher return should be ready to bear higher risk. Risk in the stock market is
measured by volatility of share price since it involves in changing price movement of shares
(Mgbame & Ikhatua, 2013).

A policy which is used by the company to determine its dividend payout to shareholders is called
as dividend policy. Dividend Policy indicates the percentage flow of remaining net income to
shareholders (Fama & French, 1988). As per the previous studies (Baker and Powell,1999;
Hussainey, Mgbame, & Chijoke-Mgbame, 2011; Gulet, Sajid, Razzaq, Iqbal, & Khan, 2012;
Zainudin, Mahdzan, & Yet, 2018) dividend policy has direct impact on share price volatility as
well as firm value. Different theories were developed to show the link between divided policy
and share price movement in the past. It was examined in many countries in various years.
However, unresolved problem on the theories compared with practical are still discussed by
many researchers as previous findings revealed contradictory results. Most of the researchers
have just used correlation and multiple regression analysis to examine the research problem
rather considering panel data analysis even though data that was derived from different
companies for multiple time period. Therefore, this study intends to examine impact of dividend
policy on share price volatility among non-financial institutions listed in Colombo Stock
Exchange, Sri Lanka using panel data analysis as it may have time and industry effect on the
data. Sri Lankan stock market has been found as frontier market, since it is located in developing
country that is less advanced than emerging market like China and India. When the people have
awareness of price movement of shares and its determinants, they will be attracted to invest in
share market in Sri Lanka. It may lead to develop capital market in countries like Sri Lanka. In
order to make the decision based on the share price volatility in terms of dividend policy, very
limited recent studies were found in Sri Lanka (Harshapriya, 2016; Gunarathne, Priyadarshanie,
& Samarakoon, 2016; Dewasiri & Weerakoon Banda, 2014). Therefore, this study will give an
idea not only to investors for making their investment decision but also to management of the
company to formulate dividend policies according to the behaviour of investors in Sri Lanka at
present.

2. LITERATURE REVIEW

It consists of theoretical framework which explains the theories behind this study and empirical
review reveals the similar studies carried out in various countries by different researchers.

2.1 Theoretical Framework

Numerous theories were developed by scholars time to time to show how dividend acts to move
share price in the market. This study is carried out under the three main theories in regard to the
relationship between dividend policy and stock price volatility.
 Lingesiya Kengatharan, Jeyan Suganya Dimon Ford 229

Miller and Modigliani (1961) developed the first theory called dividend irrelevant theory says
that investment and financing decision are used to determine value of the firm as well as share
price and it is not determined by dividend decision with some assumptions under perfect market
situation. Black and Scholes (1974) acknowledge the above argument with the finding of their
study using capital assets pricing model. Soon after MM theory, Farrar and Selwyn (1967)
argued against irrelevancy theory of dividend regarding taxation on capital structure. They said
that higher tax rate on personal income such as dividend than capital gain may lead to lower the
value of share. Brennan (1970) and Litzenberger and Ramaswamy (1979) arrived at same
conclusion with Farrar and Selwyn (1967).

Another theory developed by Gordon (1963) and Lintner (1962) as a response to dividend
irrelevancy theory developed by Modigliani and Miller's in 1961. They insist that dividend affect
the stock’s price and investors’ behaviour. Because, it was found that they prefer cash dividends
over capital gain as future profits from capital gain are uncertain and there is information
asymmetry. When dividend is provided at high rate it will allow shareholders to increase their
wealth through influencing its stock price. The concept was supported by other researchers (Ball,
Brown, Finn, & Officer, 1979; Woolridge, 1983) with their findings of the studies. Besides these
theories, signalling theory was also developed to discuss about how firm value is influenced by
dividend policy of the firm. Asquith and David (1983) stated that when management declares
dividends, it conveys a strong signal that the company has enough cash to provide dividend.
Therefore, if investors purchase shares of the firm they may benefited with expected return in
future.

2.2 Empirical Review

2.2.1 Share Price Volatility

Unpredictable change in share price is called as share price volatility. Higher risk in the stock
market can be identified when there is a high share price volatility and vice versa. It is considered
as a dependent variable in this study. It is measured in different method using various formulas.
But the formula used in this study to calculate share price volatility is similar to measurement
used by most of the previous researchers (Nazir, Abdullah & Nawaz, 2012; Hussainey et al.,
2011; Zakaria, Muhammad & Zulkifli, 2012; Harshapriya, 2016) considering risk.

2.2.2 Dividend Payout

The percentage of earnings paid out to shareholders as dividend is meant dividend payout. It
helps investors to make sure a company can be maintained payment of divided continuously in
230 Dividend Policy and Share Price Volatility: Evidence from Listed Non-Financial Firms in Sri Lanka

the long run. Sugathadasa (2018) stated that there is an insignificant relationship between
dividend payout and share price volatility from the study done in Sri Lankan Colombo stock
exchange. Nevertheless, Harshapriya (2016) found significant negative relationship between
dividend payout and stock price volatility in her study carried out in Sri Lanka. Hussainey et al.,
(2011) in UK stock market, Nguyen, Bui and Do, (2019) in Vietnam, AlQudah and Yusuf
(2015) in Jordanian firms, Hashemijoo, Ardekani, and Younesi (2012) and Hooi, Albaity, and
Ibrahimy (2015) in Malaysian firms found that dividend payout ratio has significant negative
relationship with share price volatility. However, Mehmood (2019) carried out a study in
Pakistan revealed significant positive impact of dividend payout ratio on share price volatility.
Most of the literatures regarding dividend payout ratio was found to be a significant negative
relationship between payout and share price volatility. Dividend payout is calculated by dividing
dividend per share of a firm by earnings per share of particular firm.

Current study hypothesized as:

H1: There is a significant impact of dividend payout on stock price volatility.

2.2.3 Dividend Yield

Dividend yield tells that how much income will be received relation to share price. Fama and
French (1988) say that dividend can predict stock returns. Shah and Noreen (2016) found
significant negative relationship between dividend and share price volatility among Pakistan
firms. Ahmad, Alrjoub and Alrabba (2018) carried out a study to examine the effect of dividend
policy on stock price volatility in Jordan. It was found that there is a significant negative
relationship between dividend yield and movement of stock price. It means that higher dividend
yield of the firms makes the stock price volatility lower which lead to more stability of the stock
price. However, Al-Shawawreh (2014) found that there is a very weak positive relationship
between dividend yield and share price volatility in his study done in Jordan. Gunarathne et al.,
(2016) have found that previous year dividend yield has significant and positive impact on share
price volatility while current year dividend yield doesn’t have any impact on share price volatility
among manufacturing firms in Sri Lanka. Dividend yield is calculated by dividing annual
dividend per share by average market price per share. Similar formula was used by Zakaria et al.,
(2012) and Harshapriya (2016) for calculating dividend yield.

H2: There is a significant impact of dividend yield on stock price volatility.

2.2.4 Dividend per Share

Dividend per share is the total amount of dividend declared for each ordinary share outstanding.
Investors who expect stable income for their investment use this ratio to determine how much
money is distributed by the firm to their shareholders. Dissanayake and Wickramasinghe (2016)
 Lingesiya Kengatharan, Jeyan Suganya Dimon Ford 231

found that there is no any significant impact of dividend per share on share price volatility among
Sri Lankan firms. Sulaiman (2015) revealed the result of similar study in Nigeria that the
dividend per share indicated significant positive connection with stock price changes. Most of the
researchers who have intended to examine impact of dividend policy on share price volatility
didn’t take dividend per share as an explanatory variable. Dividend per share will be calculated
by total dividend by shares outstanding.

H3: There is a significant impact of dividend per share on stock price volatility.

2.2.5 Firm Size

Firm size is considered as controlling variable of the study used the same in the previous studies
(Zakaria et al., 2012; Lashgari & Ahmadi, 2014). It can be measured in different ways for various
purposes such as number of employees, total assets and total sales revenue. In this study it is
measured using total sales revenue as sample consist of service organisations which do not have
valuable tangible assets compared to other types of firms. Previous studies show various
relationship between firm size and share price volatility. Al-Shawawreh (2014) in Jordan, Ahmad
et al., (2018) in Jordan, Zakaria et al., (2012) in Malaysia, Dewasiri and Weerakoon Banda
(2015) Sri Lanka and Nuwani (2015) in Sri Lanka found significant positive relationship between
firm size and share price volatility while Hashemijoo et al., (2012) in Malaysia, Shah and Noreen
(2016) in Pakistan, Ali and Waheed (2017) in Pakistan and Hooi et al., (2015) in Malaysia found
significant negative relationship between them. It is calculated using natural logarithm of total
sales.

H4: There is a significant impact of firm size on stock price volatility.

2.2.6 Leverage

Leverage is also used as a control variable of the study as used in previous studies. It is a
borrowed capital in the firm used as a funding source for financing assets of the firm. When the
leverage is beyond the limit, it may be risk for the firm there by volatility of equity price may
increase. Positive significant impact of leverage on share price volatility was found in studies
done by Ahmad et al., (2018) in Jordan and Ali and Waheed (2017) in Pakistan. But, Shah and
Noreen (2016) in Pakistan and Zakaria et al., (2012) in Malaysia found significant negative
relationship between leverage and share price volatility. It is calculated in various ways, but in
this study it is calculated by dividing total debt by total assets.

H5: There is a significant impact of leverage on stock price volatility.

232 Dividend Policy and Share Price Volatility: Evidence from Listed Non-Financial Firms in Sri Lanka

3. RESEARCH METHODOLOGY

3.1 Sampling and Data Collection

The major aim of the study is to examine the impact of dividend policy on share price volatility
of non financial firms listed in Colombo stock exchange, Sri Lanka. Sample of the study is 81
non-financial firms selected under random sampling method from Population of 225 non-
financial firms. Some firm in the population were eliminated purposively as they don’t have
enough relevant data, few of them didn’t issue dividend for all five years from 2013 to 2017 and
unavailability of annual reports since they have listed in the Colombo Stock Exchange only
before three years. The secondary data for this study was retrieved from the annual report of
sample firms for the period of five years from 2013 to 2017.

3.2 Research Model

Aim of the study is to investigate the impact of dividend policy on share price volatility focusing
Sri Lankan listed non financial firms in Sri Lanka. Panel data takes into account the observations
regarding comparable transversal units over a large number of time periods; there may be cross-
sectional effects on each company or on a group of companies. Numerous methods are available
to solve these types of problems, although the models with fixed and random effects in panel
econometric techniques are more essential. The fixed effects model takes into account the
independence of each company or cross-sectional unit included in the sample by allowing
interception to vary per company, but still assumes that the slope coefficients within the
companies are constant (Pratheepan & Yatiwella, 2016).

The random effects model estimates the coefficients based on the assumption that the individual
or group effects are not correlated with other independent variables and can be formulated
(Pratheepan & Yatiwella, 2016). For purpose of selecting method of analysis that is most suitable
to conduct the empirical analysis, pooled OLS, fixed and random effect models are performed.

Pooled OLS model

Fixed Effect Model

Random Effect Model

In the equation:
SPVit is share price volatility of firm i at time t.
DPit is dividend payout of firm i at time t.
DYit is dividend yield of firm i at time t.
DPSit is the dividend per share of firm i in time t.
LEVit is financial leverage of a firm i at time t.
FSit is Size of firm i at time t.
 Lingesiya Kengatharan, Jeyan Suganya Dimon Ford 233

α0 – intercept coefficient of firm i at time t.

α1, α2, α3, α4, & α5 – row vectors of slope coefficient of regressors
εit: Stochastic error term of firm i at time t
uit: error term of firm i at time t

4. RESULTS AND DISCUSSIONS

4.1 Descriptive Statistics

It shows summary of collected data from each company over time period for this study. It
enables to provide basic information about variables in a dataset.

Table 1: Descriptive Statistics

Variables Obs Mean St.Dev. Minimum Maximum
Dividend Payout 405 .5068 1.0402 -7.6272 11.3557
Dividend Yield 405 .0396 .0393 0 .4735
Dividend Per Share 405 6.3765 13.3900 0 85
Leverage 405 .3605 .2178 .0099 .9702
Firm Size 405 9.7958 .4482 8.7355 11.1544
Share Price Volatility 405 .1047 .0842 0 .4665

As per the descriptive statistics presented in the table 1, mean value of dividend payout is .5068.
It has the range from -7.6272 to 11.3557. Dividend yield ranges from 0 to 0.4735 and mean value
is 0.0396 with the standard deviation of .0393. Dividend per share has mean value of 6.3765 with
the minimum value is 0 and maximum value is 85. Leverage ranges from .0099 to .9702 and
mean value is .3605 with the standard deviation of .2178. Firm size has the mean value 9.7958.
Mean value of the share price volatility is 0.1047 which ranges from 0 to .4665. This is the
general information of the data collected for this study.

4.2 Correlation Analysis

It is performed to measure strength of relationship only between a pair of variables. It does not
allow to think about cause and effect. It leads to quantify how well two variables relate to each
other. Therefore, it is treated as a basic analysis to move further advanced statistical analysis.
234 Dividend Policy and Share Price Volatility: Evidence from Listed Non-Financial Firms in Sri Lanka

Table 2: Correlation Analysis

DPR DY DPS LEV FS SPV
DPR 1.0000
DY 0.4480* 1.0000
0.0000
DPS 0.1597* 0.1929* 1.0000
0.0013 0.0001
LEV -0.0122 0.0229 0.1222 1.0000
0.8067 0.6460 0.0138
FS 0.0046 -0.0329 0.0192 0.1770* 1.0000
0.9267 0.5090 0.6955 0.0003
SPV -0.0834 0.1301* -0.3824* 0.1129* -0.1775* 1.0000
0.0939 0.0088 0.0000 0.0231 0.0003
* correlation is significant at the 0.05 level (2 tailed)

Result of correlation analysis between explanatory variables and dependent variable is presented
in table 2. According to this results, dividend payout ratio is not significantly associated with
share price volatility (r = -0.0834, P = 0.0939). But all other explanatory variables considered in
this study which are dividend yield (r = 0.1301, P = 0.0088), dividend per share (r = -0.3824, P =
0.0000), leverage (r = 0.0029, P = 0.0231) and firm size (r = -0.1775, P = 0.0003) are
significantly correlated with share price volatility. Therefore, it can be concluded that dividend
yield and leverage have positive association with share price movements while dividend per
share and firm size have significant negative association with share price volatility.

4.3 Test for Variance Inflation Factor (VIF)

Variance Inflation Factor (VIF) and Tolerance can be used to analyse the multicollinearity among
the independent variables. The VIF measures the extent the variance of estimated regression
coefficients are inflated as a result of being related to the other independent variables, and
Tolerance is the amount of variability of the selected independent variables not explained by
other independent variables (Al-Shawawreh, 2014). Any variables with a VIF value above 10 or
with a value below 0.10 of Tolerance would have a correlation of more than 0.90 with other
variables, indicative of the Multi-co linearity problem (Hair,Tatham & Anderson, 1998). Results
of VIF test of this study presented in the table 3 explain that there is no multicollinearity among
the explanatory variables.

Table 3: Values of Variance Inflation Factor

Variable VIF 1/VIF
DPR 1.28 0.7823
DY 1.26 0.7921
DPS 1.06 0.9416
LEV 1.05 0.9530
FS 1.03 0.9666
Mean VIF 1.14
 Lingesiya Kengatharan, Jeyan Suganya Dimon Ford 235

4.4 Panel Data Regression Analysis

Since the data used in this study collected from various firms for different year period, panel data
regression analysis is employed to test hypotheses. Because it can resolve the problem with entity
effect and time effect in the data set. Therefore, Breusch and Pagan Lagrangian Multiplier Test
and Hausman Specification Test were employed to find which of Pooled OLS, fixed effect and
random effect model is appropriate to explain finding of the study.
Table 4: Panel Data Regression Analysis
Variable Pooled OLS Fixed effect Random effect
(Coef) (Coef) (Coef)
C 0.4353** 0.9398 0.5669**
Dividend Payout -0.0103** -0.0026 -0.0032
Dividend Yield 0.5551** 0.3772** 0.4406**
Dividend Per Share -0.0027** -0.0008* -0.0016**
Leverage 0.0743** 0.0355 0.0441
Firm Size -0.3643** -0.0873* -0.0494**
No. of obs 405 405 405
R-square 0.2657 0.1211 0.2517
F-statistic/ Wald Chi2 of the
model and P Value 28.87(0.000) 6.91(0.000) 55.28(0.000)
F Test
(Pooled VS Fixed) 15.92(0.000)
Breush & Pegan Lagrange
Multiplier Test
(Pooled VS Random) 415.66 (0.000)
Hausman Specification Test
(Fixed Vs Random) 4.73(0.4494)
*/** indicate coefficient is statistically significant at the 5/1 percent level of significance respectively.

Table 4 illustrates the results of pooled OLS, fixed effect and random effect models to investigate
the impact of divided policy on share price volatility in Sri Lankan non financial firms for the 5
years period from 2013 to 2017. As per their probability values of the F statistics indicated in the
Table 4, all three models are significant to explain the impact of dividend policy on share price
volatility (pooled OLS model: F= 28.87, P = 0.000; fixed effect model: F= 6.91, P = 0.000; and
random effect model: F= 55.28, P = 0.000). Even though, it is identified that which model is
more suitable to explain the impact of dividend policy on the share price volatility by performing
the relevant analysis.

Firstly, F test is performed to compare the pooled OLS model and fixed effect model and it is
hypothesised that null hypothesis = fixed effect does not exist, alternative = fixed effect exist. As
per the results summarised in the table 4, outcome of the F test revealed that p value is less than
0.01 and therefore null hypothesis is rejected that there are time fixed effects in the model.
Secondly, Breusch and Pagan Lagrangian Multiplier test is performed to compare the pooled
OLS model and random effect model and it is hypothesised that null hypothesis = random effect
does not exist, alternative = random effect exists. The result indicated in table 4, that the p value
is 0.000 and null hypothesis is rejected the in favour of the alternative which implied that random
effect model is more appropriate than pooled OLS. In order to decide which one of the alternative
236 Dividend Policy and Share Price Volatility: Evidence from Listed Non-Financial Firms in Sri Lanka

panel analysis models whether it is fixed effect model or random effect model, Hausman
specification test is performed. By performing the Hausman test statistics (4.73, P > 0.05), it is
identified that random effect model is appropriate as the null hypothesis accepted that random
effects would be consistent and efficient. Therefore, random effect model is found to be most
suitable to explain the impact of dividend policy on share price volatility in Sri Lankan non
financial firms for the period from 2013 to 2017. Similar finding was observed by the Dewasiri
and Weerakoon Banda (2014) and suggested that random effect model is suitable to examine the
impact of dividend policy on share price volatility of non financial firm in Sri Lanka.

As per the random effect model presented in the table 4, 25 % of the total variability in the share
price volatility has been explained by dividend policy in Sri Lankan non financial firms for the
period from 2013 to 2017. Out of five explanatory variables considered in this study, dividend
per share (α = -0.0016, P < 0.01) and firm size (α = -0.0494, P < 0.01) have shown the significant
negative impact on share price volatility. But, dividend yield (α = 0.4406, P < 0.01) indicates
significant positive impact on share price volatility. However, dividend payout (α = -0.0032, P >
0.05) and firm leverage (α = 0.0441, P > 0.05) have not shown any significant impact on share
price volatility. Therefore, the results of the study are supported with H 2, H3 and H4 that dividend
yield, dividend per share and firm size have significant impact on share price volatility. But,
findings of the study are not supported with H 1 and H5 that dividend payout and leverage don’t
have any significant influence on share price volatility.

Result of the studies carried out by Sugathadasa (2018) and Mehmood (2019) are consistent with
the finding of this study dividend payout doesn’t have any impact on share price volatility. It
contradicted with the findings of Hussainey et al., (2011), Hashemijoo et al., (2012), Dewasiri
and Weerakoon Banda (2014), Alqudah and Yusuf (2015) and Nguyen et al., (2019) found the
significant relationship between dividend payout and share price volatility. Dividend yield has
significant positive influence on share price volatility in this study. Similar finding has been
observed by previous study of Al-Shawawreh (2014). However, this result is contradicted with
the studies of Ahmad et al., (2018) and Shah and Noreen (2016) found significant negative
relationship between dividend yield and volatility of share price. Another contradicted study
conducted by Gunarathne et al., (2016) in Sri Lanka revealed that there is no significant
relationship between dividend yield and share price volatility.

Further, dividend per share has shown significant negative relationship with share price volatility
in this study. This finding is also contradicted with the studies of Sulaiman (2015) and
Dissanayake and Wickramasinghe (2016). According to the results, firm size has significant
negative impact on share price volatility in the current study. This is validated with studies of
Hashemijoo et al., (2012), Shah and Noreen (2016), Ali and Waheed (2017) and Hooi et al.,
(2015). But, contradicted with the studies of Al-Shawawreh (2014), Ahmad et al., (2018);
Dewasiri and Weerakoon Banda (2014) and Nuwani (2015) as they have found the significant
positive relationship. Finally, Leverage has not shown any significant relationship with share
price volatility in this study. This outcome is contradicted with the results of Ahmad et al.,
(2018), Ali and Waheed (2017), Shah and Noreen (2016) and Zakaria et al., (2012) as they have
found significant relationship.
 Lingesiya Kengatharan, Jeyan Suganya Dimon Ford 237

5. CONCLUSION

Purpose of the study is to examine the impact of dividend policy on share price volatility
focusing 81 non financial firms listed on CSE for the period from 2013 to 2017. Panel data
analysis is performed to test the impact and random effect model is identified as best model to
explain in this empirical study. It was found that there is a significant positive relationship
between dividend yield and share price volatility while dividend per share and firm size
significantly negatively related to share price volatility. However, dividend payout and firm
leverage have not shown any significant influence on share price volatility. In order to prevent
their future investment, investor can make their decision to invest on the company shares which
has lower risk of share price movement regarding dividend yield and dividend per share as they
have significant impact on share price volatility. Outcome of the study is in line with the
dividend relevant theory as there is a relationship between dividend policy and share price
volatility. Policy makers and top management can identify the factors which are leading to the
shareholders wealth relating to dividend policy of the firms. Further, it is suggested to future
research which can be extended with all the sectors in the Colombo Stock Exchange and to other
Asian region markets.

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