Includes bibliographical references (leaves 131-134). / The airline Industry has been recognised as a high value industry. The market carrying over 2 billion passengers each year and occupied over 35% of global merchandise in trade by value.Studies have been conducted globally to investigate the feasibility and return on investment for local or international airlines, with several analytical methodologies in use. The focus of this dissertation is to analyse the impact of financial risk factors, including interest rate exposures, currency fluctuations, and fuel price changes on the airline industry. This study investigates risk exposures in the South African airline industry and uses data on South African Airways (SAA) and Comair to calculate the impact of risk factors on exposure significance. The key results show that, on average, the exposures are more significant over the short-term horizons which becomes fundamental as the horizon length increases. In cases where the non-linear coefficient is slightly strengthened as the return horizon is lengthened, the sign of the exposure point coefficient does not necessarily point in the favourable direction of returns. Thus, a positive coefficient indicates a tendency of the risk factor and returns to move in the same direction, while a negative sign means that the impact on returns decreases as the exposure increases. Based on the financial ratio analysis of the airline characteristics, the results indicate that SAA shows a better return on investment better than Comair. Particularly SAA (SAA Annual Report: 2005) shows an improvement in performance with an increase in revenues and stable cost bases, despites the unexpected increase in oil dollar prices by 42%, which contrib tes to a large increase in returns. Lastly, structural changes in exposures are investigated, focusing on an extraordinary event of the global aviation industry the terrorist attack in New York on September 11 , 2001. No impact on SAA or Comair was found during the study period, which indicates that our study subjects may be less risk impacted by U.S. influences in comparison to other international airlines. The common financial speculation of higher risks are accompanied by higher returns may not be feasible to the airline industry, but strategic planning changes and future financial management adaptations to fit the global economy may bring a positive impact on the industry. This brings opportunities for further research.

Includes bibliographical references (pages 72-77). / This study investigates whether executives backdate share option grants to their advantage in South Africa. Using data of 175 option grants to executives among the 41 top companies in South Africa between 2001 and 2006, a pattern of negative cumulative abnormal stock returns before the grant dates but positive and increasing returns thereafter is observed. This pattern is much more pronounced for unscheduled grants. Statistical testing shows the mean cumulative abnormal returns are significantly different from zero after the grant date, but are not significantly different from zero before the grant date. The mean differences in average cumulative abnormal stock returns between pre- and post- grant periods are significantly different. The results suggest that some opportunistic behavior might have taken place around the executive option grants, including backdating.

This study investigates the prevalence of emotional biases that influence South African students' decision-making in an investment context. This study advances the understanding of whether the future financial professionals of South Africa are susceptible to irrational decision-making due to the influence of emotional biases. A questionnaire-based survey was employed to test whether a sample of South African finance students exhibit emotional biases that influence their investment decision-making. The questionnaire posited investment scenarios to which the students would answer intuitively based on the information that was provided to them. This study asked the students to respond using their "gut-feel" to test whether emotional biases were inherent in their decision-making process. It was found that the respondents were influenced by market trends, otherwise known as the representative bias, making them more susceptible to notice patterns in truly random sequences of data, or making them think that future patterns will resemble previous patterns. 85% of respondents did not show a tendency to anchor to a particular reference point. However, the data showed that 15% of the respondents did not give an answer when asked to answer intuitively, while 100% of the students gave a response when a reference point was introduced. Just over half of respondents exhibited traits of overconfidence, and, consistent with historical research, males exhibited greater overconfidence than females. However, male and female responses showed mixed results in respect of loss aversion scenarios. Furthermore, the analysis revealed that 58% of respondents were partial to choosing options that were framed positively. Finally, there was no significant evidence that respondents were influenced by the herding bias or the illusion of control bias. In summary, this study found at least prima facie evidence of some emotional biases that influence investment decision-making. This conclusion demonstrates a viable basis for future research on the role of emotion (and, pertinently, emotional intelligence) in investment decision-making.

Bibliography: pages 234-247. / The Capital Asset Pricing Model (CAPM) postulates that beta is a quantitative measure of a company's undiversifiable risk, the determinants of which are of considerable interest to financial managers and investors alike. Analytical research has shown that beta is a positive function of a company's unlevered or asset beta and its market value debt to equity ratio (i.e. financial leverage). In turn, unlevered beta has been shown to be a positive function of a company's operating leverage, and the trade-off between operating and financial leverage proposed as a means of stabilising beta. The objective of this research was to empirically determine the nature of the relationships · between: beta and financial leverage; beta and operating leverage; and financial and operating leverage. A significant level of positive association was hypothesised between beta and both financial and operating leverage, while a significant negative association was hypothesised between financial leverage and operating leverage.

The objective of this study is to analyse the impact of the change in the definition of bank capital according to Basel 3. The 2008 financial crisis exposed the flaws in the global regulatory and supervision framework and also showed that Basel 2 could not fully protect against bank failures. In order to address the gaps, loopholes and deficiencies of Basel 2 and to guard against any future crises, the Basel 3 accord was implemented in 2013. The key change introduced by Basel 3 is the requirement that banks hold more capital. However, the Basel 3 accord also changed the definition of bank capital and the definition of risk-weighted assets (RWAs). In comparing Basel 2 with Basel 3, several changes in the definition of capital appear. It is therefore important to analyse the impact of the capital definition change introduced in Basel 3 excluding the changes in the definition of RWAs. The study used a sample of the fifty largest commercial and investment banks by asset size from the USA and the Europe region. The study calculated the Basel 2 Tier 1 capital ratio and Basel 3 Tier 1 capital ratio at the same point in time by only changing the reported capital under Basel 2 and Basel 3 but keeping the RWAs the same at Basel 2 level. This is to isolate the capital definition change and exclude changes to the RWAs definition. The change in the regulatory Tier 1 capital ratio is the estimated impact of the change in the definition of bank capital according to Basel 3. The data sample shows that the banks in the Europe region are larger in size than the USA banks on average. The results show that the change in the Basel 3 capital definition had a positive impact on the European banks' capital ratios and in contrast there was a negative impact on the USA banks' capital ratios. The limitations of the study include the use of a small sample size of fifty banks, the omission of Asian banks from the sample size even though these include some of the largest banks in the world, and the selection of banks with December year ends only. This study contributes to the literature because it is the first study to examine the capital definition change in Basel 3.

Includes abstract. / Includes bibliographical references (leaves 105-108). / This study presents research on credit risk assessment in emerging market countries with particular emphasis on the Kenyan and Nigerian markets. Using prior emerging market research, information from credit rating agencies and information gained from a country visit, a revised methodology is devised. Using this methodology, the individual banks scores are in line with the expectations of how they would rank relative to each other in terms of qualitative and quantitative factors.

There is a growing interest in renewable energy generation projects due to environmental and sustainability concerns. However, initial costs and uncertainties caused by a number of factors can render renewable energy projects unattractive when subject to conventional financial assessment. The overall benefits of renewable energy technologies are often not well understood and consequently are often evaluated to be less effective than traditional technologies. From the moment that the energy sector abroad started a deregulation process, with a high level of competitiveness and associated increased market uncertainty, traditional evaluation techniques became insufficient to properly deal with these additional risk and uncertainty factors. Consequently, the way investors evaluate their investments require more sophisticated evaluation techniques. Initial research suggests that the value of renewable energy projects can be enhanced by the application of real options theory. In addition to revealing the benefits that renewable energy projects provide when employing real options, analytical results indicate that real option analysis is a highly effective means of quantifying how policy planning uncertainty, including managerial flexibility, influences renewable energy development. However, real option literature regarding renewable energy generation projects is limited and the theory requires further development to take advantage of more flexibility value within renewable energy projects. Literature is particularly limited in terms of small businesses and individual homeowners and worthy of analysis. This study attempts to address this issue. This study shows that real option analysis is useful, in the face of numerous uncertainties, in assisting South African homeowners and small businesses in the six largest metros and Eskom when considering an investment in a solar PV system. Within these six metros and Eskom three different tariff structures are offered, some of which encourage such investments while others don’t, thus forcing the latter to purchase expensive battery systems and consequently making the investment somewhat ineffective. Investments in solar PV systems are relatively costly and so, before committing, one needs to be certain that the system will be cost effective. In this study, it is shown that there is strong evidence that real option analysis is, not only useful in determining whether such an investment is cost effective, but also in assisting with the timing of such investments. This could be crucial for success. The findings of this study have theoretical implications in terms of the efficiency of real option analysis in the South African energy sector, and thus provide a contribution to real option literature in this sector. They also have practical insights for investors, both homeowners and small businesses in the South African context, who are looking to invest in a solar PV system. The study starts with an introduction and background to energy generation and then presents a literature review concentrating on the use of real options as an appropriate valuation method for renewables. Thereafter, the hypothesis is stated and the data sample and research methodology discussed. One of the limitations of this study was the unreliable data and the difficulty finding it, which could give rise to self-selection bias. Finally, the results and a brief analysis are presented and then, in conclusion, there is a discussion on the limitations of the study and suggestions for further research.

Forecasting nonperforming loans (NPLs) is a primary objective for credit providers. NPL forecasts assist in financial budgeting and provisioning for bad debts. The difficulty in accurately identifying the determinants of domestic NPLs has led to a review of time series forecasting techniques. This dissertation explores whether a forecasting model combining a traditional time series approach with a Fourier series residual modification technique performs well in projecting NPLs. It also seeks to establish if selecting an adequate time series model before modifying its residual terms is of benefit. Using the data of an unsecured consumer credit provider in South Africa, the in-sample and out-of-sample performance for a seasonal time series model and residual modified model were evaluated. The results demonstrate that a time series model performs well but the out-of-sample forecasting errors may be reduced by including the lowest Fourier frequencies to modify the residual terms.

Includes bibliographical references. / My research looks into Mergers and Acquisitions (M&A) and examines crossborder mergers and acquisitions (CBMAs) as an important channel for investments in the emerging markets via Foreign Direct Investments (FDIs) over the last two decades. Compared to previous M&A transactions, mostly from developed countries, multinational companies from emerging markets have played an increasingly important role in concluding these multi-million dollar deals. Previously small and domestic companies were developed into multinational enterprises (MNEs) in order to access international markets and to enable them to compete globally. This research looks into those valuable characteristics of CBMAs and tries to establish whether they create market value for the acquiring companies originating from the emerging markets. Statistical and financial data has been gathered about a number of CBMAs concluded by MNEs, especially from the emerging markets. This data covers period the 1990 to the beginning of 2013.

Includes bibliographical references. / This study investigates predictability in financial markets, specifically the South African financial market, proxied by the Johannesburg Stock Exchange (JSE) All Share Index (ALSI). It provides scientific evidence of past research of turning points in markets, focusing on bull markets as evidence suggests that predictability of bull markets leads to superior returns for an asset manager. In addition, this study provides an analysis of macroeconomic variables that can be used for predictability in the South Africa financial market. We found that certain macroeconomic variables do contain an element of predictability with the yield spread and short term interest rates being the best indicators. In addition we found that predicting the Bull Run in its earliest phase provides superior returns to an asset manager.