main purpose of this chapter is to conceptualize the research study on the
basis of selected variables from the literature review. In this chapter, the researcher
makes an attempt to develop a theoretical framework based on literature review
and decide the analyzing tools which are used to analyze the data. This chapter
explains the definitions of the variables and operationalization of the study. Finally, the latter
part of the chapter describes the validity and reliability of the study which is used to measure the research problem.
Population and sample of the study
All the 291 Listed companies in Colombo Stock
50 companies using simple random sampling method
The population of the study is the all the companies
listed on Colombo stock exchange.
Approximately 291 companies can be taken as the population which included 20
The sample included 40 companies listed in CSE which have
dividend announcements before 2017/11/15. The simple
random sampling method was used to select the sample using MS excel and
“RAND” function. After allocating random value for each company the list was
sorted ascending order. First 40 companies have been selected as the sample.
All the first 40 companies not included because some companies do not pay a dividend
in my observed time period. Therefore, when the researcher met a company which does not pay divided, it is rejected and
selected the next company which pays a dividend for their customers. Time period
consists 2 years of the period from 2013
to 2017 which mean Panel data are used in this research. The data is being directly collected from
annual reports which have been uploaded to Colombo stock exchange website
As above mentioned The research is based on annual
reports which uploaded to CSE. that means
the research mainly based on secondary data.
Definition of variables
Share price volatility (SP)
This is the Depended variable of the study. The increase or decrease
in Share price will affect changes in investor’s emotions in the marketplace. When calculated share price
volatility firstly found the mean of the share price. That mean sum of opening
and closing share prices divided by two.
After that to find the share price volatility deducted the beginning
of the year share price from the end of
the year share prices divided by beginning of the share price. The formula is
is the first independent variable of the study. It can be expressed as the
dividend per share as a percentage of share price. It is calculated by using dividend per share
(excluding tax credit) divided
by share price in the market. The figures were obtained directly from
the annual report which is uploaded to CSE website. Black and Scholes, (1974) also argue that
the best method for testing the effects of dividend policy on stock prices is
to test the effects of dividend yield on stock returns.
is the second independent variable of the study. It is able to express as the ratio of dividend per share as a
percentage of earning per share. It is calculated by using dividend per share
(excluding tax credit) divided by earning per share. Here earning per share is
calculated by using profits after tax (PAT) divided by a number of ordinary shares issued by the firm. The figures were obtained directly from
the annual reports which are uploaded to CSE website.
is the first control variable in the
study. Total assets are used as a proxy
for size. The figure for this variable was directly obtained from the annual reports which are uploaded to CSE website.
Long-term debt (LD)
is the second control variable of the study. The
figure for this variable was
directly obtained from the annual reports
which are uploaded to CSE website. This
represents all interest-bearing financial
amounts due within one year e.g. debentures, mortgages, and loans with a
maturity greater than one year.
in Assets (GA)
is the third control variable in the
study. The figure for this variable was directly obtained from the annual reports which are uploaded to CSE website. The growth rate for each year was calculated by taking the ratio of the
change in the total asset at the end of
the year to the level of the total asset
at the beginning of the year.