Faculty of Commerce, Law and Management (ETDs)

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    An evaluation of corporate actions as a shareholder wealth creation mechanism for JSE-listed investment holding companies
    (University of the Witwatersrand, Johannesburg, 2023) Schwenke, Nicholas
    Background: Investment holding companies represent a category of company primarily focused on adding value by increasing the value of the stakes in the businesses they own. In South Africa there is a trend for Investment Holding companies to trade at a price lower than their reported intrinsic net asset value that is widely commented on by management teams and the financial press. It is also accepted that corporate actions are known to have an impact on share price and investor behaviour. Purpose: The purpose of this research is first to quantify the discount to intrinsic net asset value across a sample of holding companies. This research will also determine if corporate actions pursued by holding companies have reduced any discounts which exist and, in the process, created value for shareholders. Finally, an assessment of which corporate actions is most effective in reducing the discount (if any) will be prepared. Method: Discounts are quantified by comparing daily share prices to the reported intrinsic net asset value. The impact of corporate actions is evaluated using an event study methodology using multiple estimation models. Results: The results showed that corporate actions resulted in no significant abnormal returns apart from in a six-month event window after the event announcement date. Statistically significant negative abnormal returns were noted in this event window. This indicates that corporate actions are not an effective way of reducing the discount to intrinsic net asset value. Contribution: This research adds to the existing JSE event study literature by focusing on a specific subset of companies. The research makes a theoretical contribution by suggesting value creation strategies for businesses which may be fundamentally mispriced
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    The effect of investments in digital assets on the performance of the company
    (2021) Mofokeng, Senzekile
    The fourth industrial revolution (4IR) has been topical for South Africa as one of the strategies to gain a competitive advantage as a country. 4IR comprises artificial intelligence (AI), the internet of things (IoT), virtual and augmented reality, 3D manufacturing, and blockchain. Due to an increase in data volumes, the need for storage capacity and computational power, business intelligence, and cloud computing are also regarded as foundational technologies influencing trends. This study focuses on three categories of 4IR technologies namely, artificial intelligence, business intelligence (BI) & data sciences, nd cloud computing to investigate the share price performance of companies listed on the Johannesburg Stock Exchange (JSE). Using a quantitative design, an events study methodology is used based on the efficient market hypothesis. This determines whether public announcements made through the stock exchange news service (SENS) result in an increase in the share price and correspondingly market value measured through abnormal returns. The news tested was for a JSE listed company purchase of a target company to acquire digital fourth industrial revolution assets. Four hypotheses were tested, whether share price showed any response to 4IR technology investments. Second, whether share price increase within three days after an announcement. Third, increase in abnormal returns on the day of the news release, and fourth, enquiry into increased abnormal returns three days after the announcement date. Empirical evidence failed to support hypotheses 1, 2,and 4, whereas hypothesis 3 was supported. Significantly, BI data science related announcements could predict an increase in abnormal returns on the day of the announcement as well as the debt ratio. Whilst the adoption of 4IR technologies in South African corporates have increased, from the study one can infer that investors do not perceive a positive effect on wealth and value increase from these investments with the exception of business intelligence and data science investments
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    Capital market reaction to changes in the Minister of Finance in South Africa
    (2020) Tshikovhela, Azwianzi
    The efficient market hypothesis (EMH) has been a key topic of Finance in developing and developed countries. This study will focus on the application of the EMH on a particular political event in South Africa as developing country. The study investigates the reaction of the Johannesburg Stock Exchange (JSE) equity market returns and JSE government bonds’ yield returns due to changes in the National Minister of Finance in South Africa. Several theories were applied to provide perspective on the issue of information flow and market returns volatility. The study adopted the event study methodology to analyse the effect on changes in the Minister of Finance on the JSE capital market and abnormal returns were calculated using the market model approach, with an event window period of 21 trading days and an estimation period of 252 trading days. The study was focused on a period of 10 years, from 2009 until 2018, which is a period after the apartheid era. The research analysed a sample of the Top 100 JSE listed firms in 2018 and all the government bonds listed on the JSE that were trading during the period of this study. The overall results show that JSE equity market returns and JSE government bonds’ yield returns react insignificantly negatively or positively depending on the timing and circumstances surrounding the change in the National Minister of Finance. These findings have important implications for the optimal strategies of risk-averse capital market investors