Impact of Dividend Policy on Share Holders’ Wealth A Study of Listed Companies in Hotels and Travels Sector of Sri Lanka

this research intends to study the impact of firm’s dividend policy on shareholders’ wealth. The objective of the company is to increase the wealth of its shareholders. It is therefore necessary, to understand the nature of the relationship between dividend and shareholders' wealth. Tourism remains the fastest growing service industry in the economies of most of developing countries. Sri Lanka entered the international tourism market in the 1960s. Since then, Hotel and Travel sector has been growing steadily as a promising sector. In particular, the contribution of Hotel and Travel sector to Gross Domestic Product was 2% in Sri Lankan economy. In attempt to fill this research gap the present study was initiated to find out the impact of dividend policy on shareholders’ wealth of top ten listed companies under hotel and travel sector in Sri Lanka during the period from 2008 to 2012. Secondary data is collected from company annual report. This research used the correlation, regression and descriptive statistics to evaluate the data collected from the top ten listed companies under hotel and travel sector. In addition the dividend policy has significant impact on shareholders' wealth. There are Positive relationship between Return on Equity, dividend per share and Dividend payout ratio and Shareholders’ wealth of top ten listed companies under hotel and travel sector in Sri Lanka and mean while there is a negative relationship between retention ratio and Shareholders’ wealth.