Employee ownership in companies in Cameroon: An instrument for creation of shareholders’ wealth?

Abstract

Purpose

The purpose of this paper is to examine the impact of employee ownership (EO) on the creation of shareholders’ wealth in companies in Cameroon.

Design/methodology/approach

The methodological approach adopted is hypothetical-deductive. The sample includes 89 companies, of which 31 practiced EO policy for at least ten years. Information used come from secondary data collected over the period 2008–2013 at the National Statistical Institute of Cameroon. These data were analyzed through a time series cross-sectional regression, corrected for any latent heteroskedasticity and serial auto-correlation.

Findings

The paper finds that the average level for participation of employee in the capital is 7.4 percent and the average wealth creation of shareholders is 26 percent of invested equity. However, this average rate of creation of shareholders’ wealth is higher in companies with EO (45 percent) than in conventional firms (16 percent). For the results of model estimates, the percentage of capital held by employees affect positively and significantly at 1 percent the return on equity. This study concludes that EO is a lever for creation of shareholders’ wealth in companies in Cameroon.

Practical implications

Findings of this research can serve as framework for reflection by politicians, managers and business leaders as they will have a strategic management tool capable of improving the social climate in companies and also promoting shareholders’ wealth creation. It is a formula that would allow them combining economic and social realities of organizations.

Originality/value

No similar review has been done before in Africa in general and Cameroon in particular. Study was carried out in a context where financial market is not developed.

Citation

Alim, O. (2019), "Employee ownership in companies in Cameroon: An instrument for creation of shareholders’ wealth?", Journal of Participation and Employee Ownership, Vol. 2 No. 2, pp. 93-114. https://doi.org/10.1108/JPEO-05-2019-0012