Thesis (MBA)--Stellenbosch University, 2008. / ENGLISH ABSTRACT: Repurchasing of shares by South African companies were legalised on 1 July 1999.
This introduced an alternative to dividends for distributing cash to shareholders.
Although dividends and share repurchases realise the same value in a perfect efficient
market, the inefficiencies of the South African stock market require managers to
carefully evaluate factors like taxation and stock price valuation when selecting
appropriate distribution methods.
This research report aims to update shareholder distribution trends for industrial JSE
listed companies over the past 10 years in order to determine the impact of share
repurchases on dividend payouts. Furthermore, this research report examines the
factors that may have had an impact on shareholder distribution choices in order to
provide some guidelines for choosing appropriate distribution methods.
An initial analysis of SENS share repurchase announcements revealed that 121 JSE
listed companies repurchased about R50 billion worth of shares up to 30 June 2007.
The bulk of the shares, 65% by value, were repurchased on the open market, while
35% was repurchased through specific fixed price offers. However, a comparison of
accurate share repurchase data obtained from a sample of company annual reports,
indicate that repurchase announcements understate actual repurchases by more than
20% on average. Further analysis of distribution trends were therefore based on actual
repurchase data published in annual reports rather than SENS announcements.
After the legalisation of share repurchases in South Africa, a decline in dividend paying
companies was expected similar to that experienced by the United States since the
80's. However, a detailed analysis of 132 industrial listed companies indicated that the
proportion of dividend paying companies increased from a level of 50% to almost 75%
since the introduction of share repurchases. On the other hand, the proportion of
companies repurchasing shares initially rose to over 25%, but then declined to below
20% by 2007.
Ordinary dividends are the dominant shareholder distribution choice with 64% of
companies opting for this method. Open market share repurchases have been well
adopted with 17% of companies using this method, while only 5% and 4% of
companies using special dividends or specific repurchases respectively. Dividends
paid out of share premium (capital distributions) have also emerged as a favourite over
recent years with almost 20% of companies using this shareholder distribution method.
Current tax legislation do not provide all the advantages usually enjoyed by share
repurchases internationally and have largely prevented dividends from being
substituted by share repurchases. The decline in share repurchases up to 2007 also
indicates that share repurchases become less effective as share prices increase to
overvalued levels. While tax implications and stock price valuation remain the
dominant determinants of shareholder distribution choice, this study shows that
shareholder diversity, dividend preferences, size of distribution, and BEE requirements
also have significant influences on the choice of distribution method in the South
African context. / AFRIKAANSE OPSOMMING: Die terugkoop van aandele deur Suid-Afrikaanse maatskappye is wettig sedert 1 Julie
1999. Dit het 'n alternatief tot dividende in werking gestel om kontant aan
aandeelhouers uit te keer. Alhoewel dividende en aandele-terugkoop dieselfde waarde
in 'n perfekte doeltreffende mark realiseer, vereis die tekortkominge van die Suid-Afrikaanse
aandelemark dat bestuurders faktore soos belasting en aandeelpryswaardasie
versigtig moet oorweeg tydens die keuse van geskikte uitkeringsmetodes.
Die doelwit van hierdie navorsingsverslag is om die tendense van uitkerings aan
aandeelhouers te hersien vir industriele JSE-genoteerde maatskappye oor die laaste
10 jaar om sodoende die effek van aandele-terugkope op dividenduitbetalings te
bepaal. Verder ondersoek hierdie navorsingsverslag ook die faktore wat moonlik 'n
invloed op aandeelhouers-uitkeringskeuses gehad het, om sodoende riglyne vir die
keuse van geskikte uitkeringsmetodes saam te stel.
'n Voorlopige analise van SENS-terugkoopaankondigings toon dat 121 JSE-genoteerde
maatskappye ongeveer R50 miljard se aandele teruggekoop het tot en met 30 Junie
2007. Die grootste gedeelte van hierdie aandele, 65% se waarde, is op die ope mark
teruggekoop terwyl 35% deur spesifieke vasteprys terugkope verkry is. 'n Vergelyking
met terugkoopsyfers wat uit 'n steekproef van maatskappyjaarverslae geneem is, dui
egter daarop dat aankondigings die ware terugkope met gemiddeld 20% onderskat.
Verdere ontleding van aandeelhouers-uitkeringstendense word derhalwe gebaseer op
syfers wat in jaarverslae gepubliseer is, eerder as SENS-aankondigings.
Na die wettiging van aandele-terugkoop in Suid-Afrika, is verwag dat dividenduitbetalings
sou daal soortgelyk aan dit wat in die Verenigde State ondervind is sedert
die 80's. Die ondersoek van 132 genoteerde industriele maatskappye toon egter dat
die persentasie van maatskappye wat dividende betaal van 50% tot bykans 75%
toegeneem het sedert aandele-terugkoop 'n beskikbare opsie is. In teenstelling
hiermee, het die persentasie maatskappye wat aandele terugkoop aanvanklik tot 25%
gestyg, maar sedertdien afgeneem tot onder 20% teen 2007.
Gewone dividende is die gewildste aandeelhouers-uitkeringsmetode met 64% van
maatskappye wat van hierdie metode gebruik maak. Aandele-terugkope op die ope
mark is goed verteenwoordig met 17% van maatskappye wat van hierdie metode
gebruik gemaak het, terwyl slegs 5% en 4% van maatskappye onderskeidelik van
spesiale dividende en spesifieke aandele-terugkope gebruik gemaak het. Dividende uit
aandelepremie (kapitaaluitkerings) het ook na vore getree as 'n gunsteling keuse in die
laaste paar jaar met bykans 20% van maatskappye wat hierdie uitkeringsmetode
gebruik het.
Huidige belastingswetgewing bied nie al die belastingvoordele aan aandele-terugkope
wat normaalweg deur internasionale maatskappye benut word nie en het grotendeels
verhoed dat dividende deur aandele-terugkoop vervang is. Die afname in aandeleterugkope
tot en met 2007 is ook 'n aanduiding dat dit minder effektief raak soos wat
aandeelpryse oor gewaardeerde vlakke styg. Terwyl belasting-oorwegings en
aandeelpryswaardasies steeds die dominante drywers van aandeelhouersuitkeringskeuses
bly, bevind hierdie studie dat faktore soos aandeelhouers se
diversiteit, dividendvoorkeure, grootte van uitkerings, en vereistes van swart
ekonomiese bemagtiging ook 'n noemenswaardige invloed op uitkeringskeuses binne
die Suid-Afrikaanse konteks het.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/8443 |
| Date | 12 1900 |
| Creators | Bester, P. G. |
| Contributors | Hamman, W. O., Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | Unknown |
| Type | Thesis |
| Rights | Stellenbosch University |
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