Abstract
Staff Studies is the bi-annual (March and September) peer-reviewed journal of the Central Bank of Sri Lanka. The Journal aims at stimulating innovative research for the analysis of current macroeconomic issues and policy challenges faced by central banks while providing a forum to present recent theoretical and empirical research.
Highlights
The share market is a place where both companies and investors come together to fulfil two different objectives, borrowings and lending, respectively
Since H1 was accepted, the fixed effect model was the most suitable for the analysis of dividend policy impact to share price volatility in licensed commercial banks listed in the Colombo Stock Exchange (CSE)
The study was intended to explore the impact of dividend policy on share price volatility in Sri Lanka, while concentrating on Licensed Commercial Banking (LCB) listed in the CSE
Summary
The share market is a place where both companies and investors come together to fulfil two different objectives, borrowings and lending, respectively. The companies approach the share market in view of searching for finance and the investors in search for good investments that will yield sufficient return to their investment, to cover the risk that they are accepting by investing in companies that someone else is managing. If internal financing is not possible or not sufficient to cover the entire financing need, it has to be financed from external sources, either from new equity or debt. The companies’ capital structure consists of either equity or borrowings, where firms have to balance the finance from equity and debt, as the investors and lenders are sceptic of the risk of the company. Firms have to keep their capital structure at the optimum level in order to avoid the risk of bankruptcy
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