EXTERNAL INVESTMENT AND ITS INFLUENCE ON DIVIDEND DISTRIBUTION POLICIES IN SOUTH AFRICA FIRMS

Abstract

This research examines how external investment affects the dividend distribution policies of South African companies, with a specific focus on the moderating role of foreign ownership in relation to financial performance metrics. Employing an explanatory quantitative methodology and utilising secondary data from 75 non-financial firms listed on the Johannesburg Stock Exchange (JSE) over the period 2021–2024, the study investigates the impact of liquidity (current ratio), leverage (debt-to-equity ratio), profitability (return on assets), and firm size on dividend pay-out ratios. The regression results indicate that return on assets is positively and significantly linked to dividend payments, whereas leverage exhibits a negative association. Additionally, the findings suggest that external investment amplifies the relationship between liquidity and leverage with dividend pay-out ratios, but does not exert a significant moderating influence on either profitability or firm size. These outcomes underscore the role of external investors in fostering financial discipline and shaping dividend decisions in emerging market contexts. The study extends the dividend policy literature by offering empirical insights from South Africa and provides actionable guidance for policymakers, investors, and corporate managers striving to reconcile organisational growth with shareholder returns.