The impact of foreign ownership on the performance of Johannesburg Stock Exchange‐listed firms: A blessing or a curse?

Abstract

AbstractThe impact of foreign ownership on firm performance is debated in the literature from both a theoretical and empirical perspective. This study examines the effect of foreign ownership on the performance of nonfinancial firms listed on the Johannesburg Stock Exchange from 2012 to 2018. Using the system generalised method of moments approach to account for endogeneity, foreign ownership is found to have a positive impact on return on equity at levels of foreign ownership below 40.1% but a negative effect at higher levels. Foreign ownership has no impact on return on assets or Tobin's q. The implications of these findings are discussed.