Nexus between Foreign Shareholding and Dividend Policy of Listed Companies in South Africa

<ns3:p>Background Dividend policy remains a central issue in corporate finance, particularly in emerging markets characterised by evolving ownership structures and increasing foreign participation. In South Africa, the influence of foreign shareholding on corporate payout decisions remains inconclusive, especially within sector-specific contexts such as consumer goods firms listed on the Johannesburg Stock Exchange (JSE). Methods This study employs an ex-post facto research design using panel data from 20 JSE-listed consumer goods firms over the period 2013–2024 (283 firm-year observations). Fixed-effects and feasible generalized least squares (FGLS) estimation techniques are applied to examine both direct and indirect relationships. Financial performance, measured by return on assets (ROA), is incorporated as a mediating variable. Diagnostic tests, including Hausman, multicollinearity, and heteroskedasticity assessments, ensure model robustness. Results The findings reveal that foreign shareholding has a positive but statistically insignificant effect on dividend payout (β = 0.4536, p = 0.132). In contrast, financial performance exhibits a strong and statistically significant positive relationship with dividend payout (β = 5.8857, p < 0.001). Additionally, foreign shareholding shows a negative but insignificant association with financial performance (β = −0.159, p = 0.123). Mediation analysis indicates no empirical support for financial performance as a transmission mechanism between foreign ownership and dividend policy. Conclusions The study concludes that dividend policy in South African consumer goods firms is primarily driven by firm-level profitability rather than ownership structure. Foreign shareholding does not exert a significant direct or indirect influence on dividend decisions. These findings contribute to the corporate finance literature by providing recent, sector-specific evidence from an emerging market and highlighting the dominant role of financial performance in shaping payout policies.</ns3:p>