Abstract
The objective of this paper is to build upon the
evidences about the relationship between foreign ownership and corporate debt
policy in the Cameroonian context. The study uses a simultaneous equations
model on 238 companies observed in the period 2014-2018, and the
three-stages least square (3SLS) estimation method to take into consideration
the endogeneity problem. The results show that foreign ownership and total debt
have a two-way non linear but concave relationship. That is, companies use more
debt as foreign share increases. But, at higher levels of foreign
participation, they reduce the level of their overall indebtness. The findings
also show a scarce evidence about a convexe relationship between debt maturity
and foreign share. At at low levels of foreign participation the relationship
is negative, becoming positive at high levels. So, firms use more short-term
debt as foreign share increases. However, at higher levels of foreign
ownership, they switch their preferences to debts with longer maturity.
