The relationship between dividend payout and firm performance PDF
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Added on 2022-01-13
The relationship between dividend payout and firm performance PDF
Added on 2022-01-13
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THE RELATIONSHIP BETWEEN DIVIDEND
PAY OUT AND FIRM PERFORMANCE
Listed banks in Sri Lanka
By
K, K, N, Dilhari
MF/2009/2528
Department of Accounting and Finance
February 2014
Dissertation Presented to the Faculty of Management and Finance
Of University of Ruhuna
In Partial Fulfillment of the Requirements for the Degree of
Bachelor of Business Administration
PAY OUT AND FIRM PERFORMANCE
Listed banks in Sri Lanka
By
K, K, N, Dilhari
MF/2009/2528
Department of Accounting and Finance
February 2014
Dissertation Presented to the Faculty of Management and Finance
Of University of Ruhuna
In Partial Fulfillment of the Requirements for the Degree of
Bachelor of Business Administration
i
Acknowledgement
My dissertation is ―Relationship between dividend payout and firm performance in
listed bank Sri Lanka‖.It is the result of enthusiastic effort of my undergraduate level.
Thuse I present my dissertation to my dissertation supervisor
Mr. H.V.D.I.Abeywickrama and Mr.Manjula K.Wanniarachchithe Head of the
Department of Accounting and Finance and all lecture panel of the department of
Accounting and Finance.
Thank them for their guidelines. Especially I thank to my dissertations supervisor
Mr.H.V.D.I.Abeywickrama for providing vital guiding to do success my desecration
from beginning to end.
I wish I could not mention by names. Which all have helped me. So thank you all. My
dissertation is presented for yours.
Acknowledgement
My dissertation is ―Relationship between dividend payout and firm performance in
listed bank Sri Lanka‖.It is the result of enthusiastic effort of my undergraduate level.
Thuse I present my dissertation to my dissertation supervisor
Mr. H.V.D.I.Abeywickrama and Mr.Manjula K.Wanniarachchithe Head of the
Department of Accounting and Finance and all lecture panel of the department of
Accounting and Finance.
Thank them for their guidelines. Especially I thank to my dissertations supervisor
Mr.H.V.D.I.Abeywickrama for providing vital guiding to do success my desecration
from beginning to end.
I wish I could not mention by names. Which all have helped me. So thank you all. My
dissertation is presented for yours.
ii
Table of Contents
Acknowledgement ...................................................................................................... i
List of Tables............................................................................................................ iv
List of Figures ........................................................................................................... v
List of Acronyms...................................................................................................... vi
Declaration .............................................................................................................. vii
Certification ........................................................................................................... viii
Abstract .................................................................................................................... ix
CHAPTER 01............................................................................................................ 1
INTRODUCTION..................................................................................................... 1
1.1 Research Background ...................................................................................... 1
1.2 Research problem ............................................................................................ 3
1.3Research question and objectives ...................................................................... 4
1.3.1Research questions..................................................................................... 4
1.3.2 Research objectives ................................................................................... 4
1.4 Methodology.................................................................................................... 5
1.4.1 Research design ........................................................................................ 5
1.4.2 Research population and sampling............................................................ 5
1.4.3 Data collection.......................................................................................... 5
1.4.4 Data analysis ............................................................................................ 5
1.5 Significance of the study. ................................................................................. 6
1.6 Limitation of the study. .................................................................................... 7
CHAPTER 02............................................................................................................ 8
LITERATURE REVIEW .......................................................................................... 8
2.1 Introduction ......................................................................................................... 8
2.2 Introduction of Dividends. ................................................................................... 8
2.2.1 Definitions of dividends............................................................................. 8
2.2.2 Dividend payout ...................................................................................... 11
2.2.3 Dividend pay out ratio............................................................................. 14
2.3 Introduction of Performance........................................................................... 16
2.3.1Definitions of Performance ...................................................................... 16
2.3.2 Various type of Firm Performance .......................................................... 16
2.3.3 Measures of analyzing Firm Performance ............................................... 17
Table of Contents
Acknowledgement ...................................................................................................... i
List of Tables............................................................................................................ iv
List of Figures ........................................................................................................... v
List of Acronyms...................................................................................................... vi
Declaration .............................................................................................................. vii
Certification ........................................................................................................... viii
Abstract .................................................................................................................... ix
CHAPTER 01............................................................................................................ 1
INTRODUCTION..................................................................................................... 1
1.1 Research Background ...................................................................................... 1
1.2 Research problem ............................................................................................ 3
1.3Research question and objectives ...................................................................... 4
1.3.1Research questions..................................................................................... 4
1.3.2 Research objectives ................................................................................... 4
1.4 Methodology.................................................................................................... 5
1.4.1 Research design ........................................................................................ 5
1.4.2 Research population and sampling............................................................ 5
1.4.3 Data collection.......................................................................................... 5
1.4.4 Data analysis ............................................................................................ 5
1.5 Significance of the study. ................................................................................. 6
1.6 Limitation of the study. .................................................................................... 7
CHAPTER 02............................................................................................................ 8
LITERATURE REVIEW .......................................................................................... 8
2.1 Introduction ......................................................................................................... 8
2.2 Introduction of Dividends. ................................................................................... 8
2.2.1 Definitions of dividends............................................................................. 8
2.2.2 Dividend payout ...................................................................................... 11
2.2.3 Dividend pay out ratio............................................................................. 14
2.3 Introduction of Performance........................................................................... 16
2.3.1Definitions of Performance ...................................................................... 16
2.3.2 Various type of Firm Performance .......................................................... 16
2.3.3 Measures of analyzing Firm Performance ............................................... 17
iii
2.4 Dividend Payout and Profitability .................................................................. 20
2.5 Relationship between Dividend Payout and Firm Performance....................... 22
CHAPTER 03.......................................................................................................... 24
METHODOLOGY .................................................................................................. 24
3.1 Introduction ................................................................................................... 24
3.2 Research Design ............................................................................................ 24
3.2 Target population and sampling procedure ..................................................... 24
3.3 Data Collection. ............................................................................................. 25
3.4 Data Analysis and Presentation. ..................................................................... 25
3.4.1Regression analysis .................................................................................. 25
3.5 Conceptual framework ................................................................................... 26
3.6 Research Organizations.................................................................................. 28
3.6.1. Commercial Bank of Ceylon PLC ........................................................... 28
3.6.2. DFCC Vardhana Bank PLC ................................................................... 29
CHAPTER 04.......................................................................................................... 30
DATA ANALYSIS ................................................................................................. 30
4.1 Introduction ....................................................................................................... 30
4.1Return on equity.......................................................................................... 31
4.2Return on assts. ........................................................................................... 32
4.3 Dividend Cover.......................................................................................... 32
CHAPTER 05.......................................................................................................... 36
CONCLUSION ....................................................................................................... 36
5.1Introduction .................................................................................................... 36
5.2.1 Relationship between dividend cover with Return on assts and Return on
equity............................................................................................................... 36
5.2.2 Relationship between dividend pay out ratio with Return on assts and
Return on equity............................................................................................... 37
5.3 Conclusion of the research finding ................................................................. 38
5.4 Recommendations.......................................................................................... 38
References............................................................................................................... 39
2.4 Dividend Payout and Profitability .................................................................. 20
2.5 Relationship between Dividend Payout and Firm Performance....................... 22
CHAPTER 03.......................................................................................................... 24
METHODOLOGY .................................................................................................. 24
3.1 Introduction ................................................................................................... 24
3.2 Research Design ............................................................................................ 24
3.2 Target population and sampling procedure ..................................................... 24
3.3 Data Collection. ............................................................................................. 25
3.4 Data Analysis and Presentation. ..................................................................... 25
3.4.1Regression analysis .................................................................................. 25
3.5 Conceptual framework ................................................................................... 26
3.6 Research Organizations.................................................................................. 28
3.6.1. Commercial Bank of Ceylon PLC ........................................................... 28
3.6.2. DFCC Vardhana Bank PLC ................................................................... 29
CHAPTER 04.......................................................................................................... 30
DATA ANALYSIS ................................................................................................. 30
4.1 Introduction ....................................................................................................... 30
4.1Return on equity.......................................................................................... 31
4.2Return on assts. ........................................................................................... 32
4.3 Dividend Cover.......................................................................................... 32
CHAPTER 05.......................................................................................................... 36
CONCLUSION ....................................................................................................... 36
5.1Introduction .................................................................................................... 36
5.2.1 Relationship between dividend cover with Return on assts and Return on
equity............................................................................................................... 36
5.2.2 Relationship between dividend pay out ratio with Return on assts and
Return on equity............................................................................................... 37
5.3 Conclusion of the research finding ................................................................. 38
5.4 Recommendations.......................................................................................... 38
References............................................................................................................... 39
iv
List of Tables
Page No
3.1 Research Organizations............................................................28
4.1-Summary of Descriptive Analysis Results.......................................30
4.2- Summary of Regression analysis Results.......................................33
4.3-Summary of Regression Analysis Results.......................................34
4.4-Summary of Regression Analysis Results.......................................34
4.5-Summary of Regression Analysis Results........................................35
List of Tables
Page No
3.1 Research Organizations............................................................28
4.1-Summary of Descriptive Analysis Results.......................................30
4.2- Summary of Regression analysis Results.......................................33
4.3-Summary of Regression Analysis Results.......................................34
4.4-Summary of Regression Analysis Results.......................................34
4.5-Summary of Regression Analysis Results........................................35
v
List of Figures
Page No
3.1 Conceptual Frameworks.....................................................................26
4.1Return on equity............................................................31
4.2Return on assts.............................................................32
4.3 Dividend Cover............................................................32
4.4Dividend pay out ratio.....................................................33
List of Figures
Page No
3.1 Conceptual Frameworks.....................................................................26
4.1Return on equity............................................................31
4.2Return on assts.............................................................32
4.3 Dividend Cover............................................................32
4.4Dividend pay out ratio.....................................................33
vi
List of Acronyms
ROA-Return on assts
ROE-Return on equity
ROI-Return on investment
MM-TheoryofMillerandModigliani
List of Acronyms
ROA-Return on assts
ROE-Return on equity
ROI-Return on investment
MM-TheoryofMillerandModigliani
vii
Declaration
I hereby declare that this dissertation is my own work and effort and that, to the best
of my knowledge and belief, it contains no material previously published or written
by another person nor material which has been accepted for the award of any other
degree or diploma of the university or other institute of higher learning, except where
due acknowledgment has been made in the text.
Signature of the student: __ __
Name of the student: ___K.K.N.Dilhari__
Registration number of the student: __MF/2009/2528_
Date: _10.02.2014_
Declaration
I hereby declare that this dissertation is my own work and effort and that, to the best
of my knowledge and belief, it contains no material previously published or written
by another person nor material which has been accepted for the award of any other
degree or diploma of the university or other institute of higher learning, except where
due acknowledgment has been made in the text.
Signature of the student: __ __
Name of the student: ___K.K.N.Dilhari__
Registration number of the student: __MF/2009/2528_
Date: _10.02.2014_
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