scholarly journals Share repurchase and dividend payout behaviour: The South African experience

2015 ◽  
Vol 46 (3) ◽  
pp. 43-54 ◽  
Author(s):  
N. Wesson ◽  
B. W. Bruwer ◽  
W. D. Hamman
Keyword(s):  
South African ◽  
Best Practice ◽  
Stock Exchange ◽  
Regulatory Environment ◽  
Share Repurchases ◽  
Share Repurchase ◽  
The South ◽  
Johannesburg Stock Exchange ◽  
Dividend Payments ◽  
African Experience

Share repurchases, rather than dividend payments, are increasingly becoming the globally favoured payout method. This has prompted a renewed interest in the field, and raises questions about the actual motivation for share repurchases and whether companies are now repurchasing shares in preference to investing in future growth. This study set out to ascertain whether South African company payout behaviour mirrors global company behaviour. Comprehensive data on share repurchases are, however, not compiled by South African financial data sources or by the Johannesburg Stock Exchange Ltd. In preparation for this study, the authors thus compiled the first comprehensive share repurchase database for companies in selected JSE-listed sectors for the first 11 years (i.e. 1999 to 2009) since share repurchases were first allowed in this country.Share repurchases were found to be a popular payout method, especially in the more recent periods covered in the study. Payout value was dominated by a few companies paying dividends every year and regularly repurchasing shares. Aspects unique to the South African regulatory environment, however, resulted in the South African share repurchase experience not fully mirroring current global practice. The main constraint in the South African share repurchase environment is that comprehensive, actual-time-based share repurchase data are not available. Recommendations are made on how to align the South African regulatory environment with global best practice. Regulatory changes, as well as continued research in the field, will equip stakeholders to make informed decisions.

scholarly journals The repurchase by a holding company of treasury shares held by subsidiaries: A South African perspective

2012 ◽  
Vol 43 (4) ◽  
pp. 33-44 ◽  
Author(s):  
N. Wesson ◽  
W. D. Hamman
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Annual Reports ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Financial Reporting Standards ◽  
Holding Company ◽  
Johannesburg Stock Exchange ◽  
The Uk

This study aims to establish whether the repurchasing of treasury shares by a holding company is a regular occurrence for companies listed on the Johannesburg Stock Exchange (JSE); whether these repurchasing companies have complied with the relevant legal and reporting requirements; and what their stated motivations were for these repurchases.In a sample of 251 companies listed on the JSE from 1999 till their 2009 financial year-end, 120 (47,8%) companies executed share repurchases. Thirty-six (30%) of the 120 companies repurchased treasury shares from their subsidiaries in 55 different transactions, representing 22% of the total number of shares repurchased.Companies which repurchase treasury shares do not always comply with the legal requirements (such as obligatory Security News Agency (SENS) announcements and circulars); and the accounting requirements of International Financial Reporting Standards (IFRS) (relevant to the disclosure of the reconciliation of the number of shares in issue) are applied in an inconsistent manner in annual reports. The most common reason for the repurchase of treasury shares was that the 10% limit (on treasury shares held by subsidiaries) had nearly been reached. Various business purposes were also given. Income tax implications did not seem to be a conclusive motivation for repurchasing treasury shares.The repurchase of treasury shares by the holding company is not allowed in most other countries, like the UK, and presents unique challenges to the South African share repurchase environment. More stringent application of the JSE Listing Requirements, as well as better guidance on the IFRS disclosure requirement on the reconciliation of the number of shares in issue, is needed in South Africa. This will enable stakeholders to make better-informed decisions and will also assist research on share repurchases.This material is based upon work supported financially by the National Research Foundation. However, any opinions, findings, conclusions and recommendations expressed in this article are those of the authors alone, and the NRF does not accept any liability in regard thereto.

Post-recession share repurchase behaviour by JSE-listed companies: transparent or not?

2020 ◽  
Vol 10 (3) ◽  
pp. 465-486
Author(s):  
Gretha Steenkamp ◽  
Nicolene Wesson
Keyword(s):  
South Africa ◽  
Real Time ◽  
South African ◽  
Stock Exchange ◽  
Listed Companies ◽  
Annual Reports ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Content Type ◽  
Johannesburg Stock Exchange

PurposeShare repurchases are increasingly employed in South Africa. Disclosure on share repurchases in annual reports is poor, and a high percentage of share repurchases are not announced in real time on the Johannesburg Stock Exchange (JSE). A comprehensive database of share repurchases by JSE-listed companies has been created up to 2009, but post-recession repurchase behaviour is not known. This study aims to examine South African share repurchase behaviour (activity, repurchase entity, repurchase type and transparency) in the post-recession period and compare this to the 2000–2009 period.Design/methodology/approachComprehensive share repurchase data for all JSE-listed companies (excluding those in the basic materials and financial industries) were obtained by scrutinising annual reports and JSE announcements.FindingsThe repurchasing of shares reached a peak during the financial recession of 2008/2009, with share repurchases stabilising at a lower level post-recession. Repurchases executed by subsidiaries have decreased post-recession, probably owing to the introduction of dividends tax. However, 45% of the share repurchase value was not announced via the JSE (compared to 22% in 2000–2009).Practical implicationsReal-time JSE announcements of all share repurchases are required to improve transparency.Originality/valueOwing to low announcement rates, a lack of transparency relating to share repurchases was observed in South Africa post-recession. Enhanced corporate governance requirements could improve transparency.

scholarly journals Community structure and centrality effects in the South African company network

2013 ◽  
Vol 44 (2) ◽  
pp. 35-43 ◽  
Author(s):  
I. Durbach ◽  
D Katshunga ◽  
H. Parker
Keyword(s):  
Community Structure ◽  
Social Network ◽  
South African ◽  
Stock Exchange ◽  
The South ◽  
Market Capitalization ◽  
Johannesburg Stock Exchange ◽  
The Relationship

This paper conducts a search for community structure in the South African company network, a social network whose elements are South African companies listed on the Johannesburg Stock Exchange. Companies are connected in this network if they share one or more directors on their respective boards. Discovered clusters, called communities, can be considered to be compartments of the network working relatively independently of one another, making their distribution and composition of some interest. We test whether the discovered communities of companies are (a) statistically significant, and (b) related to other attributes such as sector membership or market capitalization. We also investigate the relationship between the centrality of a company’s position in the network and its market capitalization.

The Stock Market Reaction to Board Changes: The South African Experience

2016 ◽  
Vol 15 (3) ◽  
pp. 269-294
Author(s):  
Narendra Bhana
Keyword(s):  
South African ◽  
Executive Director ◽  
Stock Exchange ◽  
Jel Classification ◽  
Share Prices ◽  
Market Participants ◽  
Johannesburg Stock Exchange ◽  
Stock Market Reaction ◽  
African Experience ◽  
The Impact

This article investigates the impact of board changes on the share prices of the companies listed on the Johannesburg stock exchange (JSE) during the period 2004–2008. Four types of board changes are investigated: new appointments, resignation, retirement and joint appointments. Market participants consider a change in the composition of a company’s board as having information content and produce statistically significant change in the share prices of the company concerned. In particular, the informational effects of new appointments are perceived differently by the market from resignations from the company board. The results also provide evidence that market reacts more favourably to the appointment of an executive director in comparison to that of a non-executive director board appointment. JEL classification: C58, D22, E44, G10, L22

scholarly journals Asset pricing in small markets: The South African case

1988 ◽  
Vol 19 (1) ◽  
pp. 11-21 ◽  
Author(s):  
D. J. Bradfield ◽  
G. D.I. Barr ◽  
J. F. Affleck-Graves
Keyword(s):  
Asset Pricing ◽  
South African ◽  
Stock Exchange ◽  
Dividend Yield ◽  
The South ◽  
Johannesburg Stock Exchange ◽  
The One

The authors examine the validity of the CAPM for Johannesburg Stock Exchange (JSE) stocks. Additional effects, namely, dividend yield, size and liquidity are also considered using traditional tests. The results indicate that the one-parameter CAPM is well-specified for the JSE. The betas of gold shares, however, are found to be poor predictors of rand returns - but improve when viewed in dollar terms. None of the above-mentioned effects are found to be significant, however, a slight preference for high-yielding gold shares is documented. Explanations for these findings are offered and contrasted with results documented on the NYSE.

scholarly journals Integrated Reporting Compliance With The Global Reporting Initiative Framework: An Analysis Of The South African Mining Industry

2012 ◽  
Vol 11 (11) ◽  
pp. 1249 ◽  
Author(s):  
Tertia Hindley ◽  
Pieter W Buys
Keyword(s):  
South African ◽  
Stock Exchange ◽  
Mining Industry ◽  
Global Reporting Initiative ◽  
The South ◽  
Integrated Reporting ◽  
Johannesburg Stock Exchange ◽  
Statutory Requirement ◽  
Negative Impacts ◽  
Top 40

For all financial years ending on or after March 1st 2010, all companies listed on the Johannesburg Stock Exchange Ltd (JSE) have to provide an Integrated Report (as part of the JSEs listing requirements). This report is to supply sustainability information in addition to the conventional IFRS-based statements. Yet, no statutory requirement for adherence to reporting standards relating to sustainability exists. This creates the risk that sustainability reports will omit negative impacts or be otherwise misleading, yet the company is still seen as adhering to listing and thus statutory requirements. This article considers the quality of integrated reporting of the South African mining industry by evaluating compliance to the globally accepted Sustainability Framework of the Global Reporting Initiative, which includes Sector specific performance indicators, as well as GRI core indicators. Using a sample of the mining companies included in the JSE Top 40 companies, the results show that these companies used the GRI G3.1 version guidelines in producing their integrated reports and that adherence to the GRI guideline has improved over the two years under consideration.

scholarly journals Seisoenale patrone in die Suid-Afrikaanse kapitaalmark

1993 ◽  
Vol 24 (4) ◽  
pp. 142-146
Author(s):  
F. S. Hattingh ◽  
E. V.D.M. Smit
Keyword(s):  
South African ◽  
Capital Market ◽  
Stock Exchange ◽  
Seasonal Patterns ◽  
Post Office ◽  
The South ◽  
Johannesburg Stock Exchange ◽  
Price Movements ◽  
Equity Indices

Seasonal patterns in the South African capital market In this article the seasonal patterns in daily price movements of the Post Office, Eskom 168 and the RSA bonds are examined and these are compared with three equity indices namely the Gold Index, Industrial Index and Overall Index of the Johannesburg Stock Exchange. Both the South African bond and share markets display significant seasonal patterns. In contrast with international findings, it is shown that seasonal similarities exist between the bond and share markets.

Returns On Large Stock Price Declines And Increases In The South African Stock Market: A Note On Market Efficiency

2014 ◽  
Vol 13 (3) ◽  
pp. 581
Author(s):  
Thomas Frisch ◽  
Sascha Kolaric ◽  
Dirk Schiereck
Keyword(s):  
Stock Market ◽  
South African ◽  
Stock Price ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Uncertain Information ◽  
The South ◽  
Johannesburg Stock Exchange ◽  
Information Hypothesis ◽  
Top 40

This study tests for underreaction and overreaction in the South African stock market by examining abnormal returns on the stocks included in the FTSE Group Johannesburg Stock Exchange Top 40 index following large price rises and drops. The results of our empirical investigation suggest that large price increases and declines are likely to be followed by positive market returns. In addition, for the post-2008 time period the risk of these stocks increases significantly for up to two years following the original event. Therefore, the results lend further support to the Uncertain Information Hypothesis.

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