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JSE securities exchange : is there a justification for low voting shares?Gelderblom, Christo 03 1900 (has links)
A Research Report presented to the Graduate School of Business of the University of Stelienbosch in partial fulfilment of the requirements for the degree of Master of Business Administration / Thesis (MBA)--Stellenbosch University, 2006. / ENGLISH ABSTRACT: Certain companies in South Africa have dual classes of shares listed on the
JSE Securities Exchange i.e. ordinary shares and N shares.
Ordinary listed shares, nonmally holds one vote per share, are referred to as
superior voting shares. Restricted voting shares have restricted voting
benefits to the shareholders, in some cases one vote casting for thousand
shares held. Some companies have listed N shares on the JSE Securities
Exchange; these are the South African shares with restricted voting powers.
A total of 34 companies have issued low voting shares in South Africa, 2
companies started as far back as 1990. Naspers Limited is the only company
that has listed only low voting shares.
This study investigates the justification for companies issuing low voting
shares by comparing the price performance of these shares and also
investigates the justification for shares with restricted voting rights.
Tests are conducted to detenmine whether a premium is paid for South
African superior voting shares by comparing the share prices of superior
voting shares and restricted voting shares on the same day of trading on the
JSE Securities Exchange. Various parties in the South African business
community have opinions and arguments against and in favour of low voting
shares; the reasons for the issuing of low voting shares are under scrutiny.
In addition to the above mentioned tests the factors influencing the voting
premium have also been investigated. The benefits of restricted shares are
also investigated.
The results of tests conducted on dual share classes trading in South Africa
are compared with the results of similar studies on share price information of
dual share classes trading on international stock exchanges.
The findings of the study are:
Ordinary listed shares are trading at a premium comparing to restricted voting
shares, in South Africa the premium is calculated at 9.83%;
The payment of dividends to shareholders does not influence the share
premium;
The ratio of ordinary shares in relation to total shares issued does not
influence the VRP of a company;
The capitalisation of company, in other words the outstanding number of
ordinary shares valued at the market price, does not influence the voting
premium; and
Companies being controlled by families or major shareholding groups are
more likely to issue shares with restricted voting rights;
The conclusion of the study is that the limited benefits are offered to the
owners of the companies that have issued the dual classes of shares and not
to the investors' public. These owners of superior voting shares have utilised
restricted voting shares to remain in control of the companies and get access
to relative cheap investors funding.
Restricted voting shares' popularity declined to the end of 1992, the
phenomenon is consistent with demise of restricted voting shares in France / AFRIKAANSE OPSOMMING: Sommige Suid Afrikaanse genoteerde maatskappye het verskillende klasse
aandele genoteer op JSE Securities Exchange.
Daar word tel kens na gewone genoteerde aandele verwys as aandele met
superieure stem reg, die aandele sal sonder uitsondering een stem hou vir
elke uitgereikte gewone aandeel. In Suid-Afrika staan aandele met beperkte
stem reg bekend as N-aandele. Die betrokke aandele het nie dieselfde
stem reg voordele as gewone aandele nie en kan tot een stem per duisend
uitgereikte aandele dra.
'n Totaal van 34 maatskappye het beide klasse aandele genoteer, Naspers
Beperk is die enigste maatskappy wat slegs aandele met beperkte stemreg
genoteer het.
Die verhandeling ondersoek of daar enige geldige rede is vir die uitreiking van
aandele met beperkte stem reg. 'n Ondersoek word geloods deur te kyk na die
prysgedrag van die twee verskillende tipes aandele naamlik gewone en Naandele.
Die redes vir enige prysafwykings word ook ondersoek.
'n Vergelykings tussen die aandelepryse van aandele met superieure stemreg
en aandele met beperke stemreg (soos genoteer op die JSE Securities
Exchange) word gedoen om te bepaal of aandele met superieure stem reg
teen 'n premie verhandel.
Verskeie partye het argumente en opinies teen en ten gunste van die gebruik
van aandele met beperkte stemreg. die redes vir die uitreiking van aandele
met beperkte stem reg word onder die vergrootglas geplaas.
In Verdere ondersoek na die faktore wat verantwoordelik kon wees vir die
premieverskil tussen aandeelpryse van aandele met superior stemregte en
aandele met beperkte stemregte word ook gedoen. Daar word ook ondersoek
of daar enige voardele is vir die uitreik van aandele met beperkte stemreg.
Die studie sluit af met 'n vergelyking van die resultate in 'n Suid-Afrikaanse
beleggingingomgewing met die resultate van soorgelyke studies wat gedoen
is op aandeleinligting van verskeie intemasionale aandelebeurse waar
aandele met beide superieure en beperkte stem reg genoteer is.
Die bevindinge van die studie is as volg:
Gewone genoteerde aandele (aandele met superieure stemreg) soos
genoteer op die JSE Securities Exchange verhandel teen 'n premie van
9.83% oor die tydperk onder oorskou in vergelyking met aandele met
beperkte stemreg.
Die beta ling van dividende aan aandeelhouers speel geen rol op die grootte
van die pryspremie in die verhandeling van gewone genoteerde aandele en
aandele met beperkte stem reg.
Die verhouding tussen gewone aandele in verhouding to totale aandele
uitgereik speel nie 'n rol in die grote van die pryspremie nie;
Die kapitalisasie van die maatskappye, met ander word die uitstaande
gewone genoteerde aandele teen markprys, speel geen rol in die graolle van
die pryspremie nie; en
Die aandeelhouersstruktuur speel 'n ral in die uitreiking van aandele met
beperkte stemreg. Maatskappye wat beheer word deur families of graot
houermaatskappye is geneig om aandele met beperkte stemreg uit te reik.
Die gevolgtrekking van die studie is dat aandele met beperkte stemreg wei
voordele het, in die geval nie vir die breer beleggingspubliek nie maar wei vir
persone of instansies in beheer van die spesifieke maatskappye met beide
klasse aandele. Aandele met beperkte stemreg is gebruik am toegang te
verkry tot goedkoop befondsing sander am beheer van die maatskappye te
verloor.
Aandele met beperkte stemreg se gewildheid het begin afneem, nie net in
Suid-Afrika nie maar oak in Frankryk waar baie maatskappye besluil hel om
weg Ie doen mel die soort aandele.
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Dividend stability, dividend yield and stock returns on the Johannesburg Stock ExchangeKruger, Theunis Lodewicus 12 1900 (has links)
Thesis (MBA)--Stellenbosch University, 2001. / ENGLISH ABSTRACT: This study investigates the relationship between dividends and stock returns on the
Johannesburg Stock Exchange (JSE). In this mini study project a regression model is used to
investigate the relationship between dividend yield portfolios and stock returns. Each of these
dividend yield portfolios are further subdivided into dividend stability portfolios which
together with a regression model are used to investigate the relationship between dividend
stability and stock returns on the JSE.
It follows from this study that there is a non-linear relationship between the risk-adjusted
returns and dividend yields. A significant finding of this study is the fact that there is an
inverse linear relationship between the dividend yield and average stock returns for dividend
paying portfolios on the JSE. Investors on the JSE appear to place a premium on capital gains
as opposed to dividends.
It follows from this study that there is an inverse correlation between dividend stability and
the risk-adjusted return with the beta coefficient increasing as dividend stability decreases.
Within a particular yield portfolio, it is evident that higher systematic risk is associated with
shares with unstable dividend yielding histories. It is clear from the results that this dividend
signalling is not limited to high yielding stocks alone. As dividends are not entirely
controlled by managers, a low stable dividend yield could signal a low exposure to systematic
risk to outsiders. / AFRIKAANSE OPSOMMING: In hierdie studie word die verband tussen dividende en aandeelopbrengste op die
Johannesburgse Effektebeurs ondersoek. 'n Regressiemodel is in hierdie mini werkstuk
gebruik om die verwantskap tussen dividend opbrengsportfolios en aandeelopbrengs te
ondersoek. Elk van hierdie opbrengsportfolios is vervolgens verder verdeel in
dividendstabiliteitsportfolios wat tesame met 'n regressiemodel gebruik is om die verband
tussen dividendstabiliteit en aandeelopbrengs te bepaal.
Dit volg uit hierdie studie dat daar 'n nie-lineêre verband tussen risiko aangepaste
aandeelopbrengs en dividendopbrengs bestaan. 'n Noemenswaardige bevinding is die inverse
lineêre verwantskap tussen dividend en gemiddelde aandeelopbrengs vir dividend betalende
aandele op die Johannesburgse Effektebeurs. Dit blyk asof beleggers op die Johannesburgse
Effektebeurs 'n premie plaas op kapitaalgroei ten koste van dividendopbrengs.
Dit volg ook uit hierdie studie dat daar 'n inverse korrelasie is tussen dividendstabiliteit en
risiko aangepaste aandeelopbrengs met die beta koëffissiënte wat toeneem soos
dividendstabiliteit afneem. Binne 'n spesifieke dividendopbrengsportfolio is dit duidelik dat
hoër sistematiese risiko geassosieer word met onstabiele historiese dividendopbrengste. Dit
volg uit die resultate dat hierdie inligtingoordrag deur middel van dividende, nie beperk is tot
hoë dividendopbrengs aandele nie. Aangesien dividende nie uitsluitlik deur bestuurders
beheer word nie, kan 'n aandeel met lae maar stabiele dividendopbrengs, 'n boodskap van lae
blootstelling aan sistematiese risiko aan die mark oordra.
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Business cycles and stock market performance in South AfricaMuchaonyerwa, Forward January 2011 (has links)
The study investigates the relationship between stock market performance and business cycles in South Africa for the period 2002-2009 using monthly data. This is done by constructing a Vector Error Correction Model (VECM). The study specifies a business cycle model with the business cycle coincident indicator (BC) regressed against, the All Share Price Index (ALSI), Real Effective Exchange Rate (REER), Money Supply (M1), Inflation (CPIX) and the Prime Overdraft Rate (POR). The ALSI represents stock market performance whilst the rest of the variables are to enhance model specification. The study found a positive relationship between stock market performance and business cycles in South Africa. The results also indicated that business cycles are positively related to the lagged variable of the coincident indicator and money supply. In addition, the findings also reveal that BC is negatively related to interest rates and the real effective exchange rate.
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Predicting extreme losses in the South African equity derivatives marketLourens, Karina 11 June 2014 (has links)
M.Com. (Financial Economics) / This study investigates the best measure of extreme losses in the South African equity derivatives market, and applies this to estimate the size of a default fund for Safcom, the central counterparty (CCP) for exchange-traded derivatives in South Africa. The predictive abilities of historic simulation Value at Risk (VaR), Conditional VaR (CVaR), Extreme VaR (EVaR) calculated using a Generalised Extreme Value (GEV) distribution and stress testing are compared during historic periods of stress in this market. The iterative cumulative sum of squares (ICSS) algorithm of Inclan and Tiao (1994) is applied to identify significant and large, positive shifts in the volatility of returns, thus indicating the start of a stress period. The FTSE/JSE Top 40 Index Future (known as the ALSI future) is used as a proxy for this market. Two key periods of stress are identified, namely the 1997 Asian crisis and the 2008 global financial crisis. The maximum daily losses in the ALSI during these stress periods were observed on 28 October 1997 and 6 October 2008. For the VaR-based loss estimates, 2500 trading days’ returns up to 28 October 1997 and 2750 trading days’ returns up to 6 October 2008 is used. The study finds that Extreme VaR predicts extreme losses during these two historic periods of stress the most accurately and is consequently applied to the quantification of a default fund for Safcom, using 2500 daily returns from 5 June 2003 to 31 May 2013. The EVaR-based estimation of a default fund shows that the current Safcom default fund is sufficient to provide for market losses equivalent to what was suffered during the 2008 global financial crisis, but not sufficient for the magnitude of losses suffered during the 1997 Asian crisis.
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Voluntary disclosure, long-horizon investors and shareholder familiarity : an online investor relations perspectiveEsterhuyse, Leana 04 1900 (has links)
Empirical evidence indicates that companies that reduce information asymmetry by
increased voluntary disclosures achieve several benefits, such as lower cost of capital,
improved pricing, and liquidity of their shares. Despite the possibility of such benefits,
many studies report varying degrees of voluntary disclosure behaviour that is
attributable to various factors. Recent studies indicate that investors’ investment
horizon has a significant effect on actions taken by management. Companies with
predominantly short-horizon investors spend less on research and development, invest
in shorter-term projects that are less profitable than longer-term projects, and are more
likely to manipulate earnings to meet short-term earnings expectations. This study
investigates whether investors’ investment horizon has an effect on the quality of
companies’ information environment.
Long-horizon investors should be familiar with their investee company’s risks and
rewards, using both their own internal information gathering processes and the
cumulative information disclosed by management over time. Moreover, over the
course of a long-term relationship, they can become familiar with management’s
capability to deliver long-term sustainable returns. Long-horizon investors should
therefore be less concerned with short-term fluctuations of earnings and
management’s public explanations and disclosures thereof. I hypothesise that higher
(lower) proportions of long-horizon investors are associated with lower (higher) quality
voluntary disclosure.
The shareholder familiarity hypothesis was tested in this study, using an ordinary least
squares regression. Voluntary disclosures were observed via the channel of
companies’ websites. A checklist was compiled of best practices for online investor
relations, and content analyses were conducted on the websites of 205 companies
listed on the Johannesburg Stock Exchange. Shareholder familiarity was proxied by
shareholder stability, measured over nine years. The stability measure was lagged by
one year to create a temporal difference between the shareholder profile and
disclosure behaviour. I found that companies with a profile of unstable investors that
are larger, younger, dual-listed and have a Big4 auditor have higher quality online investor relations practices. The hypothesis of a negative association between
shareholder familiarity and voluntary disclosure quality is therefore accepted.
This study extends the theory on information asymmetry and voluntary disclosure by
providing evidence supporting the argument that investor horizon is a predictor of
voluntary disclosure quality. The dictum of more is better does not hold in all scenarios.
It is important for financial directors and investor relations officers to establish the
investment horizon profile of their respective companies’ shareholders before they
embark on extensive disclosure programmes. / Financial Intelligence
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The appropriateness of rules-based headline earnings guidance for listed property entities on the JSE LimitedSikhwivhilu, Tendani 02 1900 (has links)
The disclosure of headline earnings is one of the JSE Limited (JSE)’s listing requirements. All listed entities are required to comply with this disclosure requirement. Guidance in the form of The Circular on headline earnings is issued by the South African Institute of Chartered Accountants (SAICA), and is updated every time when there are changes to the International Financial Reporting Standards (IFRS). The Circular adopts a rules-based approach and specifies what is included and excluded in the calculation of headline earnings. The rules consist of general rules, which apply to all entities other than those industry groups with special provisions such as the life insurance entities.
This study questions whether a rules-based headline earnings approach or a principles-based approach is more appropriate for the calculation of headline earnings of listed property entities on the JSE, for economic decision-making purposes. The research method consisted of questionnaires that were sent out to stakeholders. The responses from the CFOs and investment analysts show that principles-based headline earnings guidance is preferred over rules-based headline earnings guidance. / Business Management / M. Phil (Accounting Sciences)
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The appropriateness of rules-based headline earnings guidance for listed property entities on the JSE LimitedSikhwivhilu, Tendani 02 1900 (has links)
The disclosure of headline earnings is one of the JSE Limited (JSE)’s listing requirements. All listed entities are required to comply with this disclosure requirement. Guidance in the form of The Circular on headline earnings is issued by the South African Institute of Chartered Accountants (SAICA), and is updated every time when there are changes to the International Financial Reporting Standards (IFRS). The Circular adopts a rules-based approach and specifies what is included and excluded in the calculation of headline earnings. The rules consist of general rules, which apply to all entities other than those industry groups with special provisions such as the life insurance entities.
This study questions whether a rules-based headline earnings approach or a principles-based approach is more appropriate for the calculation of headline earnings of listed property entities on the JSE, for economic decision-making purposes. The research method consisted of questionnaires that were sent out to stakeholders. The responses from the CFOs and investment analysts show that principles-based headline earnings guidance is preferred over rules-based headline earnings guidance. / Business Management / M. Phil. (Accounting Sciences)
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