The effect of investments in digital assets on the performance of the company
Date
2021
Authors
Mofokeng, Senzekile
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Abstract
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
Description
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management (in the field of Digital Business), 2021
Keywords
Fourth industrial revolution technologies, Fourth industrial revolution, Abnormal returns, Event study