Foreign Ownership and Corporate Dividend Policy in Cameroon

Abstract

This article analyzes the relationship between foreign ownership and dividend policy in the Cameroonian context, based on a sample of 197 companies observed over the period 2015-2017. This relationship is estimated using simultaneous equations to account for endogeneity bias. The results show that foreign ownership negatively influences dividend policy, and vice versa. However, these bidirectional links are not linear, but they assume U-shape forms. That is, low levels of foreign ownership are associated with low dividends, while the dividend increases as foreign shares get higher. Similarly, companies paying low dividends attract few foreign shareholders. The latter increases their shareholding when the dividend payout is high. Furthermore, dividend policy is dynamic in Cameroonian companies, as the current dividend is determined by the previous year's.