The timing of the release of price sensitive information by South African companies .

Date
2014-07-24
Authors
Pitea, Ilaria
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Abstract
ABSTRACT Over the last decades, several papers have investigated the determinants of managers’ disclosure policies as corporate communication, especially financial data, plays a key role in the efficient functioning of capital markets. In fact, by releasing certain information to the market, managers convey information about the future prospects of the company. Prior studies conducted in international markets have documented the existence of patterns of information disclosure by listed firms and have shown that the timing of a release is among the variables that managers can try to strategically manipulate. This study examines whether patterns also can be identified in the South African market, testing the hypotheses that the timing, intended as intra-day and intra-week, of announcements released by South African firms listed on the Johannesburg Stock Exchange through the SENS is related to the quality of the news (positive, negative or neutral), the size of the company (Small Cap, Mid Cap, Top40) and the interaction of these two variables. A quantitative methodology was used based on multi-way frequency tables to describe the relationship among the variables. Log linear regression was used to investigate this relationship and CaRT analysis graphically illustrates the results of the research conducted on 774 announcements published on the SENS over the one-year period from June 2011 to May 2012 by companies listed on the Main Board of the JSE. It was found that, on average, South African managers do not appear to strategically time their announcements in light of the quality of the news. It was also found that the size of the company influences disclosure policies, while the combination of quality and size does not play a role. Although Small companies Mid Cap and Top40 mainly release announcements during trading hours, different patterns can be identified for their releases when the market is closed, with Top40 companies showing a clear preference for early morning releases. These findings can be interpreted in light of the existing regulation and the dynamics of communication within the South African market.
Description
MBA Thesis 2013
Keywords
Johannesburg Stock Exchange, Capital market, Stocks -- Prices
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