The market reaction to secondary listing: evidence from selected JSE-listed companies
Date
2015-02-04
Authors
Omarjee, Irfaan
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Abstract
This research paper examines the effects associated with the issuing of cautionary
announcements of intent to seek a secondary listing on foreign stock exchanges for
companies with primary listings on the JSE (Johannesburg Stock Exchange). This
research was carried out to analyse whether having a secondary listing benefits the
company, whether a secondary listing enhances shareholder value, and whether this is
consistent with previous literature which showed that companies with a secondary
listing generally experience an increase in shareholder value. The market reaction to
secondary listing announcements was analysed using the event study methodology.
Abnormal returns were calculated using the market model approach, with an event
period of 61 days and an estimation period of 90 days. The research analysed a
sample of 29 corporations, which sought secondary listings between 1998 and 2013.
The analysis shows a negative cumulative abnormal return over the event period,
which suggests that, in the short term, secondary listings decrease shareholder value.
Description
Thesis M.Com. (Accounting) -- University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Accounting, 2014