A research report submitted to the Faculty of Law, Commerce and Management, University of the Witwatersrand in partial fulfilment of the requirements for the degree of Master of Commerce in Finance, Johannesburg, South Africa, September 2019 / This study examines the role of economic policy uncertainty (EPU) in influencing firm performance and leverage as a form of financing decisions, in the presence of herding in the emerging markets of Brazil, Russia, India, China and South Africa (BRICS). The increase or decrease EPU is determined by the way policymakers or investors act and the consequences of their decisions. This study tries to answer the questions of: During times of economic policy uncertainty, how do firms rationalise making leverage financing decisions; and do they herd their leverage financing decisions towards what the market or other firms have decided? The sample firms are selected based on the Top 80 listed firms by market capitalisation in their respective country stock exchanges; however, the Top 50 in Russia was used. These firms will be split into two sub-groups of the first 40 (25) listed firms and the next 40 (25) listed firms. This will provide some insight into how the first group performs as to the second group at the beginning and end of the sample period. A total of 369 firms will be sampled over a period of 15 years from the beginning of June 2002 to the end of June 2017.
Russian, Indian and South African results reject the primary and secondary null hypotheses and conclude that there is a significant relation with EPU being a factor in determining firm leverage financing decisions and that there is a significant relation with more EPU leading to herding towards firm leverage financing decisions, respectively. Brazilian and Chinese results fail to reject the primary and secondary null hypotheses and conclude that there is no significant relation with EPU being a factor in determining firm leverage financing decisions and that there is no significant relation with less EPU leading to little or no herding towards firm leverage financing decisions, respectively. EPU has an impact on business and affects the profit for many firms and this is the reason of investment delays or less consumption, which together may lead to economic activity slowdown. / PH2020
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:wits/oai:wiredspace.wits.ac.za:10539/29816 |
| Date | 09 1900 |
| Creators | Makololo, Prudence |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Format | Online resource (237 leaves), application/pdf |
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