Faculty of Commerce, Law and Management (ETDs)

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Subject: search.filters.subject.Abnormal Returns

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    Assessing the performance of Special Purpose Acquisition Companies (SPACs) in SA and USA: A Comparative Study Treat or Trick?
    (University of the Witwatersrand, Johannesburg, 2023-03) Maredi, Maakopi Reason; Mokoaleli-Mokoteli, Thabang
    This study aimed to investigate the performance of SPACs that are listed in South Africa and in the USA, with a focus on their long run performance after completing their DeSPAC Transactions. The findings indicate that, like previous generations of SPACs in the USA, Third Generation SPACs exhibit poor long run performance after completing their DeSPAC Transactions. However, in the short run, positive cumulative abnormal returns were observed surrounding their DeSPAC Transaction announcements. In relation to SPACs listed in South Africa, similar results are observed, although SPACs listed in South Africa exhibit smaller positive cumulative abnormal returns surrounding their transaction announcements when estimated over a three-day event window in comparison to their USA counterparts. The study also found that sponsor earnouts had a positive relationship with long run performance, while at-risk capital was found to not be an effective tool to align the interests between SPAC sponsors and investors. Furthermore, no evidence was found that higher redemption rates were associated with poor long run performance, with the study revealing that redemption rates were a function of the market conditions at the time of the DeSPAC Transaction announcement. The study’s contributions are providing new insights into the performance and drivers of performance of Third Generation SPACs and offers empirical evidence for regulators and investors to make informed decisions about SPAC investments. Lastly, the findings provide valuable insights for the JSE who are currently updating SPAC regulations in South Africa
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    Market reactions to financial and resources BEE deals on the JSE
    (2019) Hertz, Jenna
    In South Africa, Black Economic Empowerment (BEE) has been instrumental in the transformation of the country post-Apartheid. The involvement of key sectors in transformation is dependent on specific Industry Charters and the impact of these charters on the implementation of BEE by companies has been largely ignored by prior literature. This research examines the short-run impact of BEE equity/ownership deals on the share price performance of JSE-listed stock by calculating abnormal returns (ARs) and cumulative abnormal returns (CARs) subsequent to announcements in the resource and financial sectors. The objective of the study is to determine whether announcements of BEE deals resulted in the creation of shareholder wealth in these specific sectors. The study further explores whether size of the issuing company was a factor in how the markets received BEE deal announcements. The research employed a standard event study methodology which is widely used in finance literature to examine the impact of corporate events on shareholder wealth. The sample included 111 BEE deal announcements by resource sector companies during the period January 2003 until October 2018 and 75 BEE deal announcements by financial companies during the period January 2004 until October 2018. ARs and CARs were analysed over an 11 day event window. The results of the study found that qualifying announcements had a significant positive impact on the CARs of financial sector companies and an insignificant negative impact on the CARs of resource companies over the 11 day event window. This demonstrated that BEE deals were perceived to destroy value in the resource sector and create value in the financial sector for shareholders. The difference in reaction between the two sectors was found to be significant. Furthermore, the research findings indicated that the market reacted more favourably to BEE deal announcements made by ‘small’ companies regardless of the sector. However, while these findings were significant for the financial sector, they were proven to be insignificant for the resource sector.