Shafana, M.A.C.N.1 and Sithy Safeena, M.G.H.2
12 Faculty of Management and Commerce, South Eastern University of Sri Lanka, Oluvil, Sri Lanka
1macnshafana@seu.ac.lk, 2ssafeena@seu.ac.lk
DOI : 10.57075/jaf922sp09
Abstract
Shareholders are the principal of corporations, and they interest more in dividend decisions to receive a good return for their investment. Furthermore, dividend decision is a major device to alleviate agency problems between management and shareholders and between large shareholders and minority shareholders. The current study aims to understand the ownership structure of non-financial companies in Sri Lanka and to investigate its impact on dividend payment to realize whether to what extent the results contribute to mitigating agency problems. The independent variables comprise institutional ownership, managerial ownership, foreign ownership and ownership concentration representing ownership structure characteristics. Dividend payment is the dependent variable proxied by dividend per share. The study also selects firm size, profitability, and previous year’s dividend payment as control variables. The study was carried out on an annual data of 72 non- financial companies for a period from 2015 to 2019. The descriptive statistics of ownership characteristics reveal the majority of institutional shareholders are Sri Lankan citizens and they are major and concentrated ownership while individual shareholders have minor ownership in non-financial companies in Sri Lanka. Management body has very little holding of equity shares. Results of fixed panel regression analysis show that ownership structure does not have a significant impact on dividend payment, but profitability and previous year’s dividend payment evidence a positive relation. Dividend payment does not seem to be subjective to firm size. The results of the study are supported to mitigate the agency problems between managers and shareholders and between large shareholders and minority shareholders. The results are useful to policy makers, regulators and other corporate interested parties.
Keywords: Ownership Structure, Dividend Payment, Non- Financial Companies, Agency Problems
