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This thesis addresses the mechanics of executive remuneration from an unorthodox perspective; the view presented through the lens of imperfect market pricing. Whilst many of the criticisms of existing compensation arrangements are merited, they ignore the integrity of a crucial aspect of the way remuneration awards are calculated; the market pricing mechanism. The original contribution of knowledge of this thesis is to explain how imperfect market pricing undermines the utility of stock-based compensation awards, especially in light of the Global Financial Crisis of 2007-11 (‘GFC’).The existing position with regard to Anglo-American corporate governance emphasises the role of the market in determining optimal governance solutions. However, the market cannot regulate all conflicts. For example, the separation of ownership and control in modern corporations creates an agency problem whereby managerial and shareholder interests may diverge. Public companies therefore use performance-related pay to align the interests of management with those of firm owners. This performance-related pay often includes an element with a specific link to the price of company stock. A by-product of these arrangements is that incentives are created for executives to inflate the value of their companies in order to benefit from short-run price appreciation. This reduces the utility of stock-based pay and encourages market short-termism. There is however, a further fundamental flaw in the use of stock-based pay; it places complete faith in modern finance theory; a theory which asserts that market pricing is flawless (the so-called Efficient Capital Markets Hypothesis). However, financial and asset markets are susceptible to forces which drive prices away from intrinsic value for protracted periods and contribute to serious price distortion. Behavioural finance explains how these distortions occur and provides a more appropriate paradigm for securities market operation. The Financial Instability Hypothesis (‘FIH’) also explains how endogenous instability, emanating from the banking sector, arises as an inevitable consequence of the functioning of the capitalist economy. It further demonstrates how markets may be driven away from fundamental value, how asset bubbles occur, and how the market pricing mechanism is seriously distorted. The most serious recent crisis, the GFC, exhibited the FIH taxonomy. It exposed serious flaws in modern finance theory and revealed the dangers of flawed incentive systems in generating asset bubbles. Executives at financial institutions stand accused of short-termism, over-leveraging and poor risk management. Monitoring of management was impossible to perform effectively due to various behavioural and structural obstacles arising from the size and complexity of the institutions concerned. Moreover, a system of perverse incentives led to the failure of effective regulation of executive compensation.Reform is therefore required. The thesis will conclude with a critical analysis of recent amendments to the regulation of compensation systems at financial institutions. Based on this examination, the thesis will make some proposals for future remuneration packages in the wider economy. These proposals are designed to reduce the potential for financial instability through removing incentives for firm executives to concentrate on short-term results, and emphasize the role of qualitative indices of performance.

This thesis contributes to the literature on making agricultural markets work for the poor, with specific reference to Ethiopia. It contains three substantive chapters, which may be read independently. The chapters use primary surveys with traders conducted in 2002 (chapters 2 and 3) and 2007 (all the chapters).Chapter 1 investigates Ethiopian traders’ decision on whether and how much to use brokers. Results shine light on how the Ethiopia Commodity Exchange (ECX), which recently formalized the brokerage functions, could be most beneficial for the functioning of agricultural markets. We show that the ECX could consider introducing new food crops in the trading system, offering warehouse receipt financing to its clients, and spreading the network of its warehouses throughout the country. Chapter 2 inquires whether the focus on technological and institutional upgrading is sufficient to make Ethiopian agricultural markets more efficient and if the existence of many small intermediaries causes market inefficiency. Findings suggest that, when transporters are used, transport costs could be reduced by avoiding trans-shipment, and reducing the number of times the transporter has to stop to allow for cargo loading and off-loading. No evidence is found for increasing returns to transaction size. Chapter 3 conceptualizes the notion of market integration as ‘tradability’ and analyses what determines the likelihood of market diversification among Ethiopian traders. The variables that are found to significantly impact on this probability are location (which is correlated with access to asphalt roads), availability of market information, traders’ educational level, access to commercial finance and storage capacity. Results indicate that market fundamentals affected the likelihood of market diversification more in 2007, when prices were rapidly surging, than in 2001 when prices were decreasing. The findings of this thesis support the ‘getting markets right’ school, in that incentives, infrastructure and institutions are essential for market development, and long-distance coordination of market exchange can be achieved through public-private cooperation.

The primary purpose of this study is to test whether a value-based investment strategy will outperform a growth-based investment strategy when applied to SAREIT investment. The secondary purpose is to assess whether the SAREIT investor can discriminate between strong and weak value-REITs through sound accounting-based fundamental analysis using the F-Score Model. Building on existing research on value-based investment strategies and market efficiency, this study offers an SAREIT perspective to the existing body of knowledge on value investing theory through portfolio selection based on P/NAV, P/E, P/CF and DY ratio analysis. The holding period returns of the respective value-based portfolios are compared to their growth-based counterparts for an examination of relative performance. The evidence from this research does not offer probabilistic support that a value-based approach to SAREIT selection and investment will outperform a growth-based approach, nor that it is possible to discriminate between financially strong and weak value-REITs through sound accounting-based fundamental analysis using the F-Score Model. Further research is required to develop the said strategies and models for application to the SAREIT sector.

Soybean crushing plants operate on a crush margin, which is the monetary difference between the combined sales value of mainly soybean meal and soybean oil and the cost of raw soybeans. However, given the high volatility in the prices of these three products, crushing plants normally secure these prices simultaneously. If not, they are vulnerable to the relative price variation between these three products. Futures markets, such as the Johannesburg Stock Exchange (JSE) Commodities Derivatives Market (CDM) (previously known, and hereafter referred to, as the South African Futures Exchange (SAFEX)), provide futures contracts that can be used as a mechanism for securing these prices. Soybean crushing plants would usually buy soybean futures contracts whilst simultaneously selling soybean meal and soybean oil futures contracts (in a ratio aligned with production), thereby securing the processing plant’s gross margin or better known in the industry as the ‘crush margin’. But this is only viable given adequate liquidity within these futures contracts (which is not the case for SAFEX soybean oil futures contracts). Furthermore, if South Africa is a net importer of the underlying commodity, as is the case with soybean oil, the CBOT contract, as traded on SAFEX futures’ price normally represents the majority of the import cost also known as the import parity cost. Therefore, with most soybean oil usually being imported from Argentina, one would expect SAFEX soybean oil futures contracts to reflect the cost of imported soybean oil from Argentina (which are significantly different at times through the season). However, currently (2020), the SAFEX soybean oil futures contract is a CBOT contract, that is dual listed and cash-settled . The research study seeks to determine whether this is a misspecification and whether or not SAFEX soybean oil futures contracts should rather be based on the Argentina fob soybean oil prices which is a much better representation of South Africa’s import parity and local industry prices. If correct, it may also explain why market participants are reluctant to utilize SAFEX listed CBOT soybean oil futures contracts, explaining the low trading volumes and inadequate liquidity. Hence, the study used the Engle-Granger (1987) cointegration approach, alongside a range of diagnostic tests to evaluate the existence of adequate long and short-run cointegration relationships amongst a linear combination of data variables underlying the current specifications of SAFEX soybean oil futures contracts versus that of an alternative linear combination of data variables that are cash settled of Argentina fob prices (settlement values). Essentially evaluating its efficiency under Eugene Fama’s semi-strong-form of market efficiency, in an attempt to identify possible misspecification by referencing CBOT settlement values as opposed to Argentina settlement values that could ultimately lead to greater participation and improved liquidity. The study however failed to produce overwhelming statistical evidence for using Argentina settlement values as opposed to CBOT settlement values. Diagnostic tests revealed possible misspecification amongst the long-run equilibrium relationships for both CBOT and Argentinian soybean oil future prices, while concluding for no-misspecification amongst CBOT soybean oil future prices in the short-run. These results suggest that SAFEX soybean oil futures contracts does not incorporate all the information used by market participants in forming a prediction of subsequent spot market prices in the long-run. But does however incorporate sufficient information for such practices in the short-run, attracting speculators who hope to profit from short-term price variations in the absence of hedgers (typically soybean crushers) who in turn seek to employ effective long-term hedging strategies. Therefore, the study rather pointed towards using CBOT settlement values until South Africa becomes self-sustainable, meeting local demand with local production. In such case, a local physically settled soybean oil futures contract should be listed that accurately reflects local supply and demand conditions, given the collective participation amongst the majority of market participants within the South African soybean industry. / Dissertation (MScAgric (Agricultural Economics))--University of Pretoria, 2021. / African Economic Research Consortium / Agricultural Economics, Extension and Rural Development / MScAgric (Agricultural Economics) / Unrestricted

The thesis shows the relationship between the persistence in the financial markets returns and their efficiency. It interprets the efficient markets hypothesis and provides various time series models for the analysis of financial markets. The concept of long memory is broadly presented and two main types of methods to estimate long memory are analysed - time domain and frequency domain methods. A Monte Carlo study is used to compare these methods and selected estimators are then used on real world data - exchange rate and stock market series. There is no evidence of long memory in the returns but the stock market volatilities show clear signs of persistence.

In the first essay, I examine stock market implications of state-to-state migration flows that are known to provide the basis for social and business networks. I observe sizeable and robust excess return comovement between migration-flow receiving and sending states at both the individual stock and the state portfolio levels. Although I find that migration flows are associated with firms’ business activities, this comovement is not fully explained by economic fundamentals and decreases substantially when firms relocate to other states. In line with the view that migration networks form the basis for a common investor base for receiving and sending states stocks, I find that a) receiving states account for a significant portion of sending states stocks’ trading volume, and b) migration comovement is strongly correlated with the percent of local population born in migration states and more prevalent in states where retail investors display “old home” bias in addition to local bias. Moreover, consistent with the view that migration comovement may be rooted in sentiment shared by a common investor base, I find that it coexists with mispricing, measured by stock return reversals. In the second essay, I test whether takeover targets are more likely to be connected to bidders via domestic migration network by relating acquisitions with the availability of social and business networks formed via interstate migration flows. I find that targets are more likely to be from the migration sending states when migration networks are sturdier. Additionally, I find that targets are more likely to be from migration sending states with stronger migration network a) when acquirer and targets are in different industries, b) when migration network involves non-neighboring states, and c) when targets are small. The results are consistent with the notion that information advantage is at least a partial explanation of firms’ propensity to choose targets from migration sending states, especially when information asymmetry about target is more pronounced. Moreover, I find that takeover premium is smaller and acquirer announcement returns are higher when migration sending states targets are small with low institutional ownership, which substantiate the view that migration networks present enhanced accessibility of soft information to acquirers and that the effect of such information advantage is valuable when there is substantial degree of information asymmetry regarding targets.

This study examines the relationship between discounts on Swedish closed-end investment companies and abnormal return. By sorting Swedish investment companies by the size of their discounts, we create monthly portfolios over a period of 15 years and construct a hedge-portfolio which generate an annualised abnormal return of 9.99%. However, in contrast to prior research, we find that the hedge-portfolio’s abnormal return is penalised by the short portfolio, which exhibits positive abnormal return. This suggests that extreme negative sentiments appear to be more pervasive than positive sentiments on the Swedish market. Hence, we argue that a strategy of only investing in investment companies with the top third of discounts is superior in a Swedish context. This strategy yields an annualised abnormal return of 13.21%.

Using the ARFIMA-FIGARCH model, this dissertation examines the efficiency of Botswana's bond market. It focuses on the properties of the return and volatility of the Fleming Asset Bond Index (the main aggregate fixed income benchmark index in Botswana) over the period September 2009 to May 2019. The weak-form version of efficient market hypothesis (EMH) is used as a criterion to investigate the existence of long memory in both bond returns and volatility. The results of our study indicate that the Botswana bond market data follow, to a great extent, the long-range dependence which negates the precepts of the efficient market hypothesis. Furthermore, policy reforms intended to stimulate bond market reform and related efficiency gains appear not to have produced the desired outcomes as the existence of long memory is found across all sample periods. Further remedial policies are suggested to enhance market dynamism.

Background: Mergers and acquisitions (M&A) are two types of corporate takeover strategy, that is widely used for strengthening and maintaining a firm competitive advantage in both domestic and global markets. Where the common motives behind M&A, is to achieve business expansion through synergy, or to acquire an existing external technology/product outside of a firm's own operational territory. As the world has entered an era of information and globalization, where innovation seems to prosper and different industry markets have become ever more integrated on a global scale, not least in the software industry. Hence, more firms have resorted to M&A in order to survive in a modern competitive market. For example, to capture more market shares, boost productivity, cut development costs, improve investment returns, etc. Nevertheless, the integration process of M&A carries lots of risks, where there is lots of different factors that needs to be considered and discussed before adopting M&A strategies. Such as, what industry are the involving firm operating in, which country are the involving firm located in, and what economic impacts can be triggered by M&A announcements. However, there are currently lack of literatures investigating the economic impacts of M&A announcements across different industries. That is, depending on if the firms are operating within or outside of the same industry, the economic impacts of the M&A announcement might differ. Objectives: The objective of this thesis is to analyze the market reactions generated from M&A announcements, and determine if the economic impacts will be greater if a software target firm is merged/acquired by a software or non-software acquiring firm. Methods: A quantitative statistical event study has been used as the main methodology in this thesis. Which is a standard method to analyze market reaction, that is in this case represented by financial stock market data. Following the event study, a multiple regression analysis was conducted in order to explain the event study, by examine the economic impact on the abnormal return derived from M&A announcements. Results: The result from the event study disclosed that target firms tends to experience more positive abnormal returns, while acquiring firms will experience negative abnormal returns during M&A announcements. The results of the multiple regression analysis, revealed various significant variables that has high explanatory power to the abnormal return. Conclusions: Based on the empirical results, the greatest economic impact could be identified during an M&A announcement that involves a cooperative partnerships deals between software target firms and non-software acquiring firms. Furthermore, acquiring firms tends to offer a higher premium to target firms during M&A transactions. This in turn indicates that acquiring firms will statistically receive less abnormal returns compared to target firms. Delimitations: Due to the wide-ranging scope of an event study that has many diverse adoptions areas to explore, the author decided to make some demarcations in this thesis. In particular, this thesis will be focusing on analyzing stock price movements prior and during M&A announcements. In addition, certain factors/variables that can potentially generate a significant economic impact during M&A announcements will be investigated. Hence, other aspects that are related or may affect M&A transactions itself, will scarcely be discussed or even excluded from this study.