Market reaction to industrial actions in South Africa.

Ngidi, Nondumiso
Journal Title
Journal ISSN
Volume Title
This study examines the impact of strike action on the stock market in SA, particularly the company share price. In recent years, SA has seen a steady increase in strike actions related to wage increases, which have generally been of short duration. The study is conducted by computing abnormal returns and subsequently cumulative abnormal returns for listed companies that had experienced strikes between 2003 and 2009. The sample included 49 listed companies on Johannesburg Stock Exchange. The results of the study reveal that stock prices react negatively to the news of a strike action five days prior to the strike and continue on a downward trajectory approximately 5 days post the strike action. The study finds that JSE is not an efficient market as it takes days for the market to return to equilibrium after an announcement. The research observed that there were numerous factors that influence the occurrence of strikes/industrial actions in South Africa namely; SA’s political history, trade unions irrational behaviour, information asymmetry and economic climate among other factor.
Strikes, South Africa, Industrial action, Stock prices, JSE, Johannesburg Stock Exchange