Factors contributing to repetitive listing and delisting of JSE companies.

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Date

2017

Authors

Phalane, Jack Howard

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Abstract

Companies are listed and delisted on various stock exchanges. The listing of companies on a stock exchange creates an opportunity for the company to raise capital and affords investors the platform to buy and sell shares. The JSE Exchange (JSE), the largest stock exchange in Africa and the only stock exchange in South Africa until 2016, has had companies being listed and delisted from the exchange over time. The delisting was either voluntary in that those who control the company decided to remove its shares from the JSE, or the delisting is involuntary in that the company is for various reasons forced to delist. The reasons companies delist involuntarily include financial distress (liquidation), merger, acquisition and failure to comply with the listings requirements. The purpose of this research is to investigate the factors that contribute to continuous listing and delisting of companies from the JSE. This research analysed companies that were listed and remained listed on the JSE and the companies that were listed and eventually delisted on the JSE during the period 1 January 2006 to 31 December 2015. The research hypothesised company’s ROA, operating profit margin, share turnover, share price change, debt/assets, market capitalisation and EBITDA as independent variables that differentiate between continuous listing and delisting of companies on the JSE. From the results of the study, companies that were delisted had a higher debt ratio compared to companies that remained listed. Furthermore, companies that were delisted had lower averages of return of assets, operating profit margin, market capitalisation and earnings before interest tax and depreciation, share turnover, Tobin’s Q ratio and share price change compared to companies that remained listed during the period under study

Description

MBA Thesis

Keywords

Johannesburg Stock Exchange,Securities -- Listings -- South Africa,Corporations -- Valuation -- South Africa.

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