Corporate social responsibility and dividend policy in Sri Lankan firms: A data triangulation approach

• Published date: 01 February 2022
• Author: Narayanage Jayantha Dewasiri,Nalin Abeysekera
• Date: 01 February 2022
• DOI: http://doi.org/10.1002/pa.2283

ACADEMIC PAPER

Corporate social responsibility and dividend policy

in Sri Lankan firms: A data triangulation approach

Narayanage Jayantha Dewasiri

1,2

| Nalin Abeysekera

1

1

Faculty of Management Studies, The Open

University of Sri Lanka, Nawala, Sri Lanka

2

Sri Lanka Institute of Marketing, Colombo, Sri

Lanka

Correspondence

Narayanage Jayantha Dewasiri, Faculty of

Management Studies, The Open University of

Sri Lanka, Nawala, Sri Lanka.

Email: jayanthadewasiri@gmail.com

This study investigates the relationship between corporate social responsibility (CSR)

and dividend policy (DP) using a data triangulation approach in the Sri Lankan con-

text. The findings of the secondary data approach suggest that there is a positive

impact from environmental and social CSR on both the likelihood to pay dividends

and its payout. Findings of the primary data approach propose that ethical and phil-

anthropic CSR dimensions show a positive impact on both likelihood to pay dividends

and its payout. The findings of the triangulation approach revealed that CSR and DP

tend to rise together. Hence, we argue that the generosity of the management paves

the way towards shareholders' prosperity. This is the first study to investigate the

CSR-DP puzzle using a data triangulation approach. Future researchers could use this

study as a guideline, if they intend to conduct a research study through data triangu-

lation approaches especially in dividend policy and also in finance discipline.

JEL CLASSIFICATION

G34; G35

1|INTRODUCTION

The relationship between corporate social responsibility (CSR) and

dividend policy (DP) has been given careful consideration in the past

decade. For instance, Rakotomavo (2012) emphasized that CSR and

DP have a positive relationship in the United States context.

Rakotomavo (2012) highlighted his study as the first attempt to inves-

tigate CSR and DP. Kim and Jeon (2015) proposed that DP is posi-

tively related to CSR in both domestic and foreign subsidiaries in the

Korean context. Using 397 European companies as the final sample,

Samet and Jarboui (2017) confirmed Rakotomavo's (2012) argument.

Cheung, Hub, and Schwiebertc (2018) supported this argument stat-

ing that CSR and dividend policy are positively associated. In accor-

dance with these findings, Benlemlih (2019) emphasized that

organizations with greater CSR level are inclined to pay greater divi-

dends than the organizations with truncated CSR levels in the United

States context and Trihermanto and Nainggolan (2019) supported this

argument in the Indonesian context.

Researchers explicitly used proxy variables to measure CSR in

investigating the association between CSR and DP. For instance,

Rakotomavo (2012) used investment in CSR, Kim and Jeon (2015)

used donation to sales ratio, Samet and Jarboui (2017) proceeded

with a weighted average measure of three proxy variables such as

environmental score, social score and corporate governance score

using secondary data. Benlemlih (2019) used an overall CSR score

incorporating strengths and weaknesses of 11 CSR dimensions allo-

cating 1 or 0 for its strengths or weaknesses, respectively.

Trihermanto and Nainggolan (2019) used CSR expenses on economic,

social and environmental-related activities in measuring CSR.

Even though previous scholars primarily depended on secondary

data-based research approaches, few researchers used alternative

approaches in investigating dividend policy. For instance, Baker,

Dewasiri, Weerakoon, and Azeez (2019) and Dewasiri, Weerakoon

Banda, and Azeez (2018) emphasized the significance of the triangula-

tion approach, whereas Baker, Singleton, and Veit (2011) proposed

the value of a survey approach. As the first attempt in dividend his-

tory, Baker et al. (2019) employed a data triangulation approach to

scrutinize the dividend determinant puzzle using secondary and pri-

mary data sources in a mono-study. They used a data triangulation

method to overcome the intrinsic feebleness arising from a mono-

approach and to confirm the findings in a single study. Criticizing the

use of proxies to measure abstract concepts such as corporate gover-

nance (CG), Baker et al. (2019) provided a comprehensive picture of

the association between DP and its determinants. Similarly, we argue

Received: 25 February 2020 Revised: 16 April 2020 Accepted: 11 July 2020

DOI: 10.1002/pa.2283

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https://doi.org/10.1002/pa.2283