THE LONG-TERM PERFORMANCE OF SOUTH
Date
2011-04-12
Authors
Friedman, Adam
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Abstract
The objective of this research was to investigate the long-term abnormal price
performance of South African firms following rights issues over the period 1991-
2000. This research makes a number of contributions relative to prior research.
South Africa, unlike most other national markets, favours rights issues over cash
offers. Since most of the research has been conducted in developed markets,
South Africa, as an emerging economy, provides a valuable opportunity to
determine whether the underperformance of seasoned equity offers is confined
only to first world economies.
Results from the study showed that over a three to five year period, rights issuing
firms underperformed their equally-weighted benchmarks. The underperformance
appeared to be driven primarily by small issuers. These findings are consistent with
the South African study by Affleck-Graves & Page (1996). The research also found
that South African managers do not take advantage of overvaluation in the
seasoned equity markets.
Description
MBA - WBS
Keywords
Rights issues, Johannesburg Securities Exchange, Equities