Electronic Theses and Dissertations (PhDs)
Permanent URI for this collectionhttps://hdl.handle.net/10539/37937
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Item Institutional determinants of dividend policy: the case of African listed firms(University of the Witwatersrand, Johannesburg, 2024) Tembo, Margret; Chipeta, ChimwemweThis study examines the institutional determinants of dividend policy of African listed firms over the period from 2006 to 2020. While existing research extensively examines institutional influences in developed markets, there is a significant gap in understanding these dynamics within the African context. Utilizing a panel regression approach with generalized method of moments (GMM) estimations, the study comprises three essays. The first essay offers a comprehensive analysis of institutional determinants, specifically examining how investor protection, press freedom, property rights, financial development, and corruption shape dividend policy in African firms. The results underscore the pivotal role of institutional factors, highlighting investor protection, financial development, and press freedom as key determinants. Based on these findings, policymakers should prioritize strengthening investor protection laws, advancing financial sector development, and ensuring press freedom to create a more attractive environment for investment. The second essay explores the relationship between innovation and dividend policy in Africa, revealing a significant negative correlation. It also investigates whether institutional development influences this relationship. Results indicate that institutional development moderates the innovation-dividend policy relationship. The negative relationship is pronounced in countries with weak institutional development and tends to be positive in those with strong institutional development. Based on these findings, policymakers should focus on improving institutional quality to facilitate both innovation and dividend distribution, thereby supporting sustainable corporate growth and shareholder returns. This third essay examines the institutional factors influencing dividend smoothing in African firms. The study finds that African firms exhibit a speed of adjustment (SOA) of 0.539, indicating a moderate level of dividend smoothing, and a target payout ratio of 0.484, suggesting they pay out a high percentage of their earnings as dividends. The research highlights that firms operating in environments with low economic growth, civil law regimes, weak investor protection, weak property rights, low press freedom, underdeveloped financial institutions and markets, high corruption, weak government effectiveness, weak political stability, weak regulatory quality, and weak rule of law tend to engage in increased dividend smoothing. To address this, policymakers and business leaders in African emerging markets should prioritize improving governance and institutional quality. This can mitigate agency costs and information asymmetry, reducing the need for dividend smoothing. Strengthening investor protection, property rights, press freedom, financial markets, and governance standards will create a more stable investment climate. In conclusion, this research underscores the importance of institutional improvements in shaping dividend policies in African non- financial firmsItem How does Integrated Report Quality Affect Decision-Making? An equity analyst perspective in the South African market(University of the Witwatersrand, Johannesburg, 2024) Sebastian, Avani; Seetharam, YudhvirA key source of information about a company is their integrated reports, whose main purpose is to improve the quality of information available to investors. Seminal behavioural finance literature shows that, in situations where market participants perceive potentially imperfect information, they may be inclined to behavioural biases in their estimation of the value of a firm’s shares. However, prior literature also shows that behavioural bias may be present even when there are no evident deficiencies in the information environment. This study explores the relationship between the quality of integrated reports and behavioural bias in the South African equity market. Integrated report quality is approximated by the scores awarded by adjudicators of the EY Excellence in Integrated Reporting Awards. The study focuses on sell-side equity analysts as market participants. A convergent mixed methods design was used. Quantitative analysis was in the form of a structural equation model with latent variables for quality and each of the behavioural biases. The model incorporated data from 2208 forecasts from 316 analysts, across 342 company-years. Semi-structured interviews with 20 sell-side equity analysts were conducted to provide the context necessary for a meaningful evaluation. Across all methods of analysis, findings show that the quality of information in the integrated reports has little to no effect on the analysts’ decision-making processes. Findings from the interviews indicate that analysts consider direct interactions with management to be the most important source of information for their reports and forecasts. In these interactions, they rely on “gut feel” to establish credibility of management’s assertions. Regarding bias, the quantitative analysis showed that herding has a negative and significant association with the quality of analysts’ forecasts. The qualitative analysis confirmed the analysts’ view of the consensus forecast as a benchmark. Considered with findings of the lack of use of integrated reports, it is inferred that analysts view the consensus forecast as a more useful source of information than the information in the integrated reports. Despite the use of indicator variables with prior literature as precedent, the results of the analysis can vary depending on the choice of measurement approximations for the behavioural biases. The study makes a theoretical contribution by connecting research on integrated report quality and behavioural bias. It shows that analyst coverage, even if sponsored by the company, is considered necessary to reduce information asymmetry, despite the production of integrated reports. The study makes a methodological contribution with its analysis of qualitative data from interviews with analysts. Based on the findings, it considers how general debiasing strategies could be used in the context of analysts, thereby making a practical contribution.Item The effect of parental education on child and adult health in Zambia: A regression discontinuity analysis(University of the Witwatersrand, Johannesburg, 2024) Daka, Lincoln; Booysen, FrederikThis thesis expands upon and enhances existing research in the field of health economics. The thesis consists of three separate yet interrelated chapters that examine the effect of education on key demographic variables: child health, fertility and HIV/AIDS in Zambia, three key factors affecting the progress of development in Africa. The endogeneity problem is present in all of the three empirical papers examined. To circumvent this endogeneity problem and establish a credible causal effect, we explore the impact of Zambia’s 2002 Universal Free Primary Education (UFPE) policy which created an exogenous source of variation in education as a quasi – experiment. The three substantial empirical studies, employ the same econometric methodology, a Regression Discontinuity Design (RDD), whose appealing feature is local randomisation. This characteristic has distinguished the method from other evaluation methods in terms of estimating unbiased treatment effects. Another advantage of the fuzzy Regression Discontinuity design is that it can account for the endogeneity of the treatment variable. The utilisation of the fuzzy Regression Discontinuity design is a valuable contribution in all of the research. Furthermore, every chapter makes a unique contribution within its respective sector. We outline Zambia’s Universal Free Primary Education (UFPE) Policy and also present the Regression Discontinuity Design methodology framework. We find significant causal impacts of maternal education on child health measured by height-for-age, weight-for-height and Weight-for- age. The findings also indicate that maternal education is associated with a reduction in the prevalence of stunting and underweight and no effect wasting contrary to other research. We present evidence of the several mechanisms by which maternal education impacts child health. The results of our study indicate that a greater level of maternal education exerts a beneficial influence on child health through the postponement of marriage, the reduction in total fertility, and the delay in the age of first childbirth and sexual debut. Additionally, we have discovered indications of positive assortative mating. Furthermore, education empowers moms by facilitating their access to information via television and newspapers, equipping them with knowledge about the ovulation time, and helping them to make well-informed decisions regarding contraceptive techniques. Conventional wisdom posits that decreased fertility may indicate the presence of “superior quality” children and increased rates of survival for both mother and child. Can education serve as a catalyst for decreasing fertility rates in developing nations? We find that female education reduces iv | P a g e the number of children ever born. We present evidence of the reduction in total fertility as a result of female education. We also show that female schooling reduces the preferred number of children and increases the age at first birth. We find that female schooling affects fertility through age at first sex and marriage, literacy, assortative mating and the knowledge effect. There is no evidence to suggest that female schooling has a major impact labour market participation. We present evidence of the heterogeneous impacts of a mother’s education based on “poor versus wealthy” criterion, whether rural/urban status, region and religion. We also present evidence of the effect of female education on the HIV seroprevalence status, number of sexual partners and knowledge of HIV transmission mechanisms. We show that female education lowers HIV seroprevalence status, decreases the number of sexual partners and increases HIV knowledge. Our research suggests that educated women are more likely to have a deep and detailed understanding of HIV. Lastly, we present evidence of the heterogeneous effects of female education by household status on HIV related outcomes.Item Land Rights in Kenya: The Role of Law in Protection against Forced Evictions(University of the Witwatersrand, Johannesburg, 2024) Njoroge, Stephen Chege; Moyo, KhulekaniThe land question in Kenya from the colonial to the post-colonial periods has direct implications to the prevalence of forced evictions affecting individuals and communities. Land laws and policies enacted during the stated periods contributed largely to the problem of forced evictions. The independence Constitution also did not address the problem. The promulgation of the Constitution of Kenya 2010 (the Constitution) however laid the basis forprotection against forced evictions. The Constitution guarantees the right to housing, which is a component for protection from forced evictions as well as the right to dignity. However, it does not make provision for protection from forced evictions in the Bill of Rights. The legislature has not enacted substantive legislation on forced evictions. The courts have made efforts, though minimally, to infuse international standards on evictions in their decisions. This thesis interrogates the Kenyan legal framework, policies and institutions dealing with land and housing to identify their inefficiencies in protecting against forced evictions and has suggested recommendations for reform. The thesis establishes that Kenyan law inadequately protects individuals and communities against forced evictions. The thesis answers questions: (i) what are the limitations of the legal and institutional framework in addressing the problem of forced evictions in Kenya? (ii) what are the legal and policy measures that are necessary to mitigate the problem of forced evictions? (iii) what can Kenya learn from another comparable jurisdiction in addressing the problem? In answering the questions, the thesis provides a synopsis of issues related to forced evictions which include access to land and security of tenure. The thesis examines the genesis of the problem of forced evictions and its prevalence on individuals living in informal settlements, indigenous communities and other communities. Importantly, the thesis evaluates the impact of forced evictions on human dignity as well as interdependence of all rights to demonstrate that forced evictions have implication to other human rights. The thesis discusses protection from forced evictions in international law through the International Covenant on Economic, Social and Cultural Rights, thematic instruments, regional human rights instruments and institutions and their relevance in incorporating international best practices towards addressing the problem of forced evictions in Kenya. The thesis also draws best practices from the South African legal framework, norms, jurisprudence and judicial developments with a view to recommending the incorporation of best practices on land rights and protection against forced evictions in Kenya. This study is significant and breaks new ground because it measures the Kenyan legal framework against international norms and practices in the area of land rights and forced evictions. By drawing best practices, the study highlights the limitations and deficiencies in the Kenyan legal framework and provides options for reforms. The development of an appropriate legal framework with substantive and procedural safeguards on evictions for individuals and communities in Kenya serves as the original contribution of the studyItem Essays on Inflation Targeting and Macroeconomic Performance(University of the Witwatersrand, Johannesburg, 2024) Buthelezi, Norbert Sfiso; Malikane, ChristopherThis thesis focuses and investigates the impact of inflation targeting on macroeconomic performance, whether the level of the inflation target is consistent with optimal economic performance and finally, we investigate whether inflation targeting affects the behaviour of fiscal policy in such a way as to deliver fiscal sustainability. This is important because many central banks have adopted inflation targeting as their monetary policy framework. In chapter 2, we investigate the effect of inflation targeting on macroeconomic performance. We do so by formulating a measure of IT that is closely related to the degree of monetary policy activism that is used in the literature. Applying this to advanced and emerging market economies, we find that IT has an ambiguous effect on economic growth in advanced economies and it has negative effect in emerging markets. We also find mixed results on the effect of IT on inflation performance. Lastly, we find that IT tends to lower bond yields across economies. We argue that the financial market benefits of IT do not find expression in real economic activity because of the disconnect that may exist between financial markets and real economic activity. In chapter 3 we argue that there exists a non-linear relationship between inflation one hand and economic growth and unemployment rates on the other. IT requires an explicit announcement of a numerical target for inflation. However, it is not clear whether the announced targets are consistent with maximum economic growth and minimum unemployment rates. We derive a simple growth model in which economic growth and the unemployment rate are nonlinearly related to the inflation rate. Our findings are that there are some advanced economies that sacrifice growth to maintain low inflation rates. This sacrifice is more prevalent in emerging markets, and it ranges from 0.5 percentage points to 3 percentage points. The same results hold for the unemployment rate, excess unemployment rate to maintain the low inflation targets ranges from 0.5 to 4.5 percentage points. We argue that policymakers should consider ways to align inflation targets to optimal levels in order to include more people into employment. In chapter 4 we investigate whether the implementation of fiscal policy is consistent with the monetary policy stance. A number of economies have adopted inflation targeting as an overall framework to guide monetary policy. However, a key requirement of this framework is that fiscal policy should not be implemented in a manner that is not consistent with inflation targeting. We investigate the behaviour of fiscal authorities under inflation targeting by estimating simple fiscal rules that incorporate the targets of monetary policy as normally specified in simple Taylor rules. Our results suggest that for many of the economies in our sample, fiscal authorities respond in a counter-cyclical manner. In advanced economies they do not restrain fiscal policy when inflation rises. This is in contrast to fiscal authorities in emerging markets. Lastly, we do not find uniform adherence to Bohn’s principle of fiscal sustainability across economiesItem An Essay on the Welfare and Growth Implication of the Energy Mix in the South African Economy(University of the Witwatersrand, Johannesburg, 2023) Sesele, Masedi; Kutela, GeloThis study investigated the welfare and growth implications of introducing renewable energy in South Africa’s energy mix. The investigation is divided into three chapters, providing a holistic analysis of climate change mitigation on developmental goals in South Africa. The first chapter determines the impact of the usage of non-renewable energy sources on selected sectors’ economic output in South Africa. The second chapter determines the pass-through effect and the response of consumer prices to renewable energy share increases in South Africa while using the exchange rate as a threshold. The third chapter determines through a natural experiment the impact of renewable energy policies such as the White Paper on the Energy Policy of the Republic of South Africa (1998), the White Paper on Renewable Energy Policy (2003) and the Integrated Resource Plan (2010) on South Africa’s economic growth by comparing the gross domestic product (GDP) growth path before and after the introduction of these policies. Results from the second chapter showed that coal was the least contributing factor to production for most sectors, showing that excessive coal usage may hinder economic output within the country. Petroleum has a positive and significant effect on the transport and agriculture sectors but has less of an effect on the other sectors. Electricity is a major contributing factor to production in some sectors, except for the industry sector, which may be adversely affected by the increasing electricity costs and constant load shedding in the country. Results from the third chapter showed that at an exchange rate threshold value of 7.7 R/$, the share of renewable energy pass-through to consumer prices is statistically significant below and above the threshold exchange rate value. When the exchange rate is above the threshold value, the pass- through effect is negative, indicating that an increase in the share of clean energy will decrease consumer prices. These results are largely attributed to the cost of renewable energy, which has been declining significantly in periods where the exchange rate was above the threshold value and, as a result, it had a negative pass-through effect on consumer prices. Results from the fourth chapter showed that each of the three green energy policies has a positive impact on the GDP, which shows that implementing renewable energy policies in South Africa has not only resulted in generating clean, renewable energy but also fosters economic growth within the country. Using a natural experiment, the study constructed a synthetic GDP growth path that vi would have been in place had there been no renewable energy intervention and compared it with the current GDP growth path post the intervention of renewable energy policy to identify the causal positive impact of green energy on economic growth. This thesis’ results encourage policymakers to further implement and improve renewable energy policies as the share of clean energy within South Africa’s energy mix not only mitigates climate change by decreasing greenhouse gas emissions but also positively affects economic growth by creating a clean ecosystem, job creation, increasing innovation and capital formation and overall improving total factor productivity in South Africa and the standard of living of ordinary South AfricansItem Bank regulation, cross-border banking and interest rate pass- through in Sub-Saharan Africa(University of the Witwatersrand, Johannesburg, 2023-03) Gondwe, Sopani; Mahonye, NyashaThe thesis comprises five interrelated chapters that seek to advance empirical literature on banking and financial sector stability (risk) by focusing on some salient regulatory and monetary issues of policy relevance and interest to developing countries of Sub-Saharan Africa (SSA). The market structure and regulatory environment in which banks operate in SSA have significantly changed over the last two decades, and the banking systems of a number of countries have also markedly grown during this period. For instance, and especially after the global financial crisis (GFC), supervisory authorities in most countries introduced new regulations, and/or in some cases, enhanced their existing bank regulatory frameworks to conform with international best practice and standards. However, questions have been raised as to whether developing countries like those in SSA need to adopt international regulatory standards indiscriminately – and whether the benefits arising from the adoption of such policies or standards outweigh the costs. At the same time, the SSA region has witnessed significant penetration of foreign banks – a development that has heightened the risk of financial contagion and cross-border spill over effects. In most countries, there have also been considerable changes in the design and implementation of monetary policy over the past two decades. These changes have triggered a considerable debate on whether and how regulatory and structural factors in the financial system impede or facilitate monetary policy transmission – a debate that, as yet, is not fully settled. This study interrogates the above issues by focussing on three related questions. First, how do regulations – that are based on international best practice and standards, impact or shape risk- taking behaviour (i.e. stability) of banks in SSA? Second, what are the banking sector stability implications of increased foreign bank penetration in the host countries? Finally, how does competition and capital regulation affect the transmission of monetary policy to commercial banks’ lending and deposit rates i.e. the interest rate pass-through (IRPT) in SSA? In addressing each question, the study applied panel econometric analyses using bank and country-level data. The data was obtained from various sources, namely; Bankfocus database, the World Bank Regulatory and Supervision Surveys (BRSSs), IMF International Financial Statistics (IFS), IMF Financial Soundness Indicators (FSIs), World Bank Governance Indicators (WBGIs), Global Financial Development Database (GFDD, 2019), and The Heritage Foundation.Item Women’s decision-making, child nutrition and motherhood: evidence from South Africa(University of the Witwatersrand, Johannesburg, 2021) Adediran, Olanrewaju Adewole; Oyenubi, AdeolaThe thesis comprised three main essays. These are issues affecting the degree of equality in economic opportunities and the dynamics of earnings inequalities within the labour market. The inferences made about women's decision-making and their varied labour income due to the number of children given birth in South Africa. First, much of the existing literature contends that income is a key determinant of household decision-making. Yet the causal connection between income and household decision-making is difficult to ascertain, given the obvious endogeneity bias that may arise from reverse causality and omitting (unobserved) confounding variables correlated with income and the household decision- making measures. Thus, this study exploited the exogenous variation in household income and their decision-making. This is based on a unique natural experiment in South Africa using age discontinuity in eligibility for Old Age Pension (OAP) income transfer- to identify the causal effect of income on household decision-making. Using a regression discontinuity design (RDD), the study found that women's decision-making responded to changes in income from OAP transfer more than that of men. More so, the OAP transfer influenced women decision-making by 12% points for the recipient more than non-recipient. The results from the quantile treatment effect confirmed that the OAP income transfer effect is heterogeneous across the distribution of household decision-making. The study suggested that women should be used as a channel of distribution of social grant (in development programmes) to reduced inequality and achieve gender equalityItem Price Volatility in Maize Futures of Major Exporters(University of the Witwatersrand, Johannesburg, 2023-06) Sayed, Ayesha; Auret, ChristoFutures markets provide a platform for risk management and price discovery. Significant structural changes have taken place in futures markets over the last two decades transforming them into a volatile and fast paced trading environment, with heightened volatility expected to continue. Increased volatility in grain futures markets is of special concern to farmers, traders, academics, and policy makers as it impacts food security, renewable energy and the regulation of futures exchanges. Price volatility is investigated for maize futures listed in South Africa on the South African Futures Exchange (SAFEX), in the United States on the Chicago Board of Trade, in Argentina on the Mercado a Termino de Beunes Aires and in Brazil on the Brazilian Mercantile and Futures Exchange. A particular focus is placed on South African white maize futures, given its liquidity on SAFEX, its uniqueness as the only listed white maize contract traded on a futures exchange globally, and the importance of white maize as South Africa’s largest produced field crop and main staple food. This thesis investigates the effectiveness of price limits which are found to be ineffective in curbing volatility, and instead found to accelerate prices towards their limits prematurely, exacerbate volatility and impair market liquidity. The impact of sentiment as measured through volatility indices is also studied using a time-varying vector autoregressive framework. The results confirm the influence of sentiment on trading behaviour in white maize futures, and subsequently on price volatility. The level of speculative activity and its impact on price volatility is also examined using Granger-causality, variance decomposition and impulse response functions. Finally, volatility spillovers among key major exporters of maize is investigated using four multivariate GARCH models and a DCC-GARCH Connectedness approach, with the results confirm significant own and cross volatility spillovers and time-varying interdependence. This thesis makes novel contributions to the field of futures risk management. The work covered in this thesis is among the first to investigate price limits on SAFEX, the first to include SAVI White Maize in an empirical analysis, the first to quantify the level of speculative activity in the white maize futures market and the first to investigate spillover and dynamic connectedness in maize futures among key maize exportersItem Rail infrastructure developments and their productivity impact with special reference to institutions in five Southern African development community countries(University of the Witwatersrand, Johannesburg, 2023) Dzawanda, Bernard; Ferddeke, Johanes W.; Mahonye, NyashaThis thesis investigates the determinants of rail infrastructure investment and its impact on productivity growth in Botswana, Namibia, South Africa, Zambia and Zimbabwe for the period 1960 to 2018. The descriptive analysis of rail infrastructure data covers the period from 1939 to 2018. With the exception of South Africa, data availability limited the study analytics to start from 1960. The five Southern African Development Community (SADC) countries share a common history in terms of development, and their rail networks are interconnected. The focus of the study is on the quantity of rail infrastructure. Based on the augmented Bond, Mairesse, and Mulkay (1997) investment model, we apply the Pooled Mean Group estimator of Pesaran, Shin and Smith (1999) on novel datasets of rail infrastructure measures to estimate the drivers of rail infrastructure investment and efficiency in Botswana, Namibia, Zambia and Zimbabwe. Estimation results suggest that economic, geostrategic and institutional factors drive rail infrastructure investment, efficiency and productivity growth in the four countries. GDP is found to have an insignificant impact on rail infrastructure investment. South Africa being distinctly different from the other four countries provides a different contextual setting to investigate the determinants of rail infrastructure investment and efficiency, and its impact on productivity growth. We separately apply time series analysis in the case of South Africa using the Bounds Test technique of Pesaran, Shin and Smith (2001). Estimation results suggest that GDP has a significant negative impact on rail infrastructure investment in South Africa. Government investment has a significant negative impact on rail infrastructure investment. Research results suggest that geostrategic factors have a significant positive impact on rail infrastructure investment in the four countries, and insignificant on rail infrastructure efficiency except in the case of passenger rail infrastructure investment where the impact is negative. In contrast, geostrategic factors have an insignificant impact on rail infrastructure investment in South Africa except for mixed rail infrastructure investment where the impact is negative. The impact of geostrategic factors on rail infrastructure efficiency in South Africa is found to be positive.