Browsing by Author "Chamisa, Edward"
Now showing 1 - 10 of 10
Results Per Page
Sort Options
- ItemOpen AccessAn examination of the effect of the global financial crisis on the link between capital structure and firm performance(2024) Malekanyo, Reoagile; Chamisa, EdwardThe study examines the effect of the global financial crisis on the link between capital structure and firm performance using panel data of the South African nonfinancial firms that were listed on the Johannesburg stock exchange (JSE) for the period between 2007 and 2012. The analysis is done by splitting the entire period into the during and post financial crisis and then combining the two datasets after controlling for the period type to examine if the crisis period had an impact on the link between capital structure and firm performance. The relationship is examined based on two prominent capital structure theories, that is, the trade-off theory and perking order theory. The perking order theory assumes that a negative link exists whereas the trade-off theory assumes that a positive relationship exists. ROA is used as a proxy for firm performance. The ratios of total liabilities, long term liabilities and short-term liabilities to total assets are used as proxies for capital structure. The study uses firm size, liquidity, and tangibility as control variables. The main findings based on the link between capital structure and firm performance show that there was an insignificant negative relationship between firm performance and all proxies of debt, that is, total debt, long term debt and short-term debt during the global financial crisis period while a strong statistically significant negative relationship existed between firm performance and both total debt and long-term debt after the global financial crisis and even after controlling for the period type. The relationship was much stronger with long term debt than with total debt. In contrast, the findings of this study show that there was no significant relationship between short term debt and firm performance during and after the global financial crisis and even after controlling for the period type. The findings of a negative relationship between firm performance and both total debt and long-term debt is consistent with the perking order theory. However, although the results show that the effect of the financial crisis was insignificant, controlling for the effect of the crisis period actually improved the link between capital structure and firm performance as the adjusted Rsquared improved after controlling for the effect of the crisis period. The results also show that there was a significant negative relationship between firm size and performance for all the models considered and that the relationship was stronger after the financial crisis and even after controlling for the period type. Furthermore, the results show that there was a strong and significant positive relationship between liquidity and firm performance for all the models, even after controlling for the period type as well. Lastly, the results of this study show a negative link between tangibility and firm performance for all the models but that the relationship was significant only after the financial crisis period and for the combined period that controls for the period type. Overall, the results in Models 5 and 6 show that although the effect of the global financial crisis was insignificant, controlling for it improved the link between capital structure and firm performance as shown by the improvement in the adjust R-squared.
- ItemOpen AccessBanks, stock market and economic growth in Botswana: a time series analysis(2018) Malebye, Nthabiseng; Chamisa, EdwardThis study examines the relationship between banks, stock market and economic development in Botswana using quarterly data from 1995 to 2016. To find out if there is a link between financial development and economic growth, the three measures of stock market development used are stock market capitalization, total value of shares traded and turnover. For bank-based financial development, the proxy is bank credit to private sector and the measure of economic growth is real gross domestic product (GDP) per capita. To analyse the long run and short run relationships among the variables of interest, this study implements the Autoregressive Distributed Lag (ARDL) cointegration technique and the Granger causality technique to find the direction of causality. The findings indicate that there is a positive short and long run relationship between stock market variables and economic growth when turnover and market capitalization are used as proxies and value traded is significant and negatively related to economic growth. The study found that bank credit to private sector is negatively related to economic growth both in the short and the long run. There is bidirectional causality between stock market financial development and economic growth and no causal relationship between banking financial development and economic growth in Botswana. This study recommends that there should be appropriate reforms to develop the financial sector in Botswana to help promote economic growth. Botswana should also have reforms to promote economic growth to foster stock market financial development. This study also offers a comprehensive and detailed overview of the state of the economy, banking system and the financial markets system of Botswana which can help foreign investors as well as individual and institutional investors in making sound investment decisions.
- ItemOpen AccessCapital structure and determinants of capital structure, before, during and after the 2008 financial crisis: A South African study(2021) Ntshobane, Gcobisa; Chamisa, Edward; Pamburai, Hamutyinei HarveyThis study examines the effects of 2007/8 financial crisis on capital structure determinants of Johannesburg Stock Exchange (JSE) listed companies in South Africa. Data extracted from INET BFA Expert database was analyzed using regression models on the correlation between the leverage and company size, growth, profitability, tangibility, liquidity, non-debt tax shield along with Ordinary Least Squares based on the sample of JSE listed companies for the period of 2004 to 2013. The study examined two industries namely, Real estate and Retail industry. The results show that size, tangibility, profitability and liquidity have significant impact on the capital structure before, during and after financial crisis. Growth results were inconsistent over the period under review, and non-debt tax shield was found to be statistically insignificant. The study also shows that the 2007/8 had statistical significance on the capital structure of the listed companies in South Africa.
- ItemOpen AccessDeterminants of bank technical efficiency: A South African study(2021) Abels, Jared; Chamisa, EdwardThe purpose of this study is to investigate the determinants of technical efficiency, using data envelopment analysis and the Tobit regression model, of the six largest listed South African banks for the years 2008-2018. An input-oriented intermediary constant-return-to-scale approach was followed to determine technical efficiency scores. After technical efficiency scores were obtained, a binary data set was created by assigning a score of 1 to all observations that were regarded as technical efficient, whereas all observations that were regarded as technically inefficient were assigned a score of 0. Thereafter, a Tobit regression analysis was performed to test the following hypotheses: skimping hypothesis, diversification hypothesis, bad management hypothesis and the funding hypothesis. The results of the regression analysis show that the skimping, diversification, and bad management hypotheses were not relevant for the six largest South African banks over the period under review. Regression results pointed towards the funding hypothesis being applicable to the six largest listed banks over the review period. It can therefore be suggested that the banks under review were generally well managed with a keen focus on expense control and thorough underwriting. To ensure the efficiency of large listed banks, it is proposed that regulators continue to monitor large banks as evidence of the study suggests that as deposit bases grow, a deterioration in technical efficiency is experienced. Generally, the results of the study indicate that the six large listed banks are overall relatively efficient over the review period.
- ItemOpen AccessExamining the relationship between ESG performance and financial performance of firms listed on the JSE(2021) Ball, Robert; Chamisa, EdwardThis study investigates the relationship between the environmental, social and governance (ESG) performance of South African firms and their corresponding financial performance over the period 2012 to 2019. Operating with an ESG-based mindset has become of increasing importance for firms over the past two decades, as a result of increasing regulation as well heightened public scrutiny and pressure. There exists evidence in support of the theory that ESG-conscious firms that practice sustainably tend to financially outperform their peers. This study employs a quantitative research methodology, using variations of panel regression models to investigate the ESG-corporate financial performance (CFP) relationship. Privately held proprietary ESG scores are used as a proxy for ESG performance and financial data is obtained from Bloomberg in order to assess financial performance. The study does not find statistically significant evidence of a relationship between firm ESG performance and financial performance. Contrasting results emerge from the study, with positive relationships and correlation coefficients found between both the ESG performance of firms and their annual stock return, as well as the ESG performance and return on assets (ROA) ratio. A negative relationship and correlation were found to exist between firm ESG performance and their price earnings ratio. These contradicting results lead to a conclusion that no relationship exists between ESG performance and CFP. Significant evidence was however found regarding certain firm characteristics leading to firms having higher ESG performance. Results show that the larger firms with greater financial leverage are higher ESG performers relative to their peers. This may imply that in order for ESG practices to be effective, firms themselves should be of a sufficient size and have access to a large amount of debt to fund relevant activities. It is recommended that further research be performed on the driving forces behind a firm's ESG performance, and the various factors that contribute most towards it, including varying levels of access to debt.
- ItemOpen AccessExploring the curvilinear relationship between corporate social performance and financial performance: Evidence from South African listed firms(2024) Van Niekerk, Michael-John; Chamisa, EdwardIn the past, there has been a wealth of research into the relationship between corporate social performance (CSP) and corporate financial performance (CFP). However, this relationship has not been thoroughly researched in developing markets, particularly in South Africa. Compelling theoretical arguments and empirical evidence have been presented both for and against the financial benefits associated with CSR. Recently, there has been an increasing number of studies attempting to reconcile these seemingly opposing views by suggesting that the CSP-CFP relationship may in fact be non-linear. This study aims to contribute to this perspective and address the research gap in South Africa by exploring the shape of the CSP-CFP relationship in a South African context. This is achieved through the use of panel regression models with fixed and random effects, on an overall CSP and component CSP level for 130 Johannesburg Stock Exchange (JSE) listed firms from 2012 to 2019 (1 040 firm-year observations). Bloomberg ESG disclosure scores are used as a proxy for CSP and its components (environmental performance, social performance, and governance performance). CFP is proxied through a measure of market-based performance, annual shareholder return (ASR), and a measure of accounting-based performance, return on assets (ROA). A significant U-shaped relationship is found between overall CSP and CFP. This same relationship is also found between environmental performance and CFP, and between social performance and CFP. Contrary to the findings of prior South African studies, a negative linear relationship is found between governance performance and CFP. The findings of this study have implications for managers facing increasing pressure to engage in environmental, social, and governance (ESG) initiatives from investors and the broader public, and for researchers in emerging markets to explore the CSP-CFP relationship from a novel perspective.
- ItemOpen AccessMonetary policy and exchange rates in different economic contexts: Case study of South Africa(2022) Choga, Simba; Chamisa, EdwardThe aim of this study is to examine the relationship between the interest rate and money supply with the exchange rate in South Africa in three periods:- before the global financial crisis (GFC) (Jan 2002 – Jan 2007), during the GFC (Jan 2008 – Dec 2009) and after the GFC (Jan 2010 – Jan 2016). No clear direction on the relationship between the monetary policy and the exchange rate has been ascertained in developing and developed economies. The Autoregressive-Distributed Lag (ARDL) model is utilized to find the objective of this study. Not much research has taken place involving the relationship of the interest rates, money supply with the exchange rate in the context of South Africa. To my knowledge this is the first study that incorporates the ARDL model to try and ascertain the type of relationship these variables have in South Africa. Therefore, new insights are yielded in the academic arena from this research's results. The results show that there is no significant relationship between the money supply and the exchange rate both in the short and long run in all three economic contexts. A significant effect is found from the interest rate on the exchange rate in the short run during and after the GFC. However, no relationship is found before the GFC between the interest rate and exchange rate. In addition, no relationship is found in the long run between the variables in all three economic contexts. The results suggest that the South African Reserve Bank SARB had a huge influence on the exchange rate during and after the GFC through changing the repo rate.
- ItemOpen AccessThe effect of idiosyncratic and macroeconomic risk on cash holdings(2022) Kadzima, Marvelous; Chamisa, Edward; Talavera, OleksandrThe thesis explores the dynamics and determinants of corporate cash holding (or corporate liquidity) in South Africa in three related studies. The first study empirically investigates the sensitivity of corporate cash holdings to changes in idiosyncratic and macroeconomic risk. The analysis is carried out for a panel of South African non-financial firms from 1980 to 2019. Employing the two-step system Generalised Methods of Moments (GMM), results show that South African firms become conservative with their cash when faced with high idiosyncratic risk and reduce cash levels in periods of high macroeconomic uncertainty. In addition, the evidence shows that the impact of both macroeconomic and idiosyncratic risk on corporate cash holdings is more pronounced in financially constrained firms. Overall, the study provides evidence of the role of risk in corporate decisions and gives insight into the firm characteristics that drive the increase in corporate cash holdings. The second study investigates the role of social media in reducing idiosyncratic risk and in enhancing firm liquidity. Specifically, the study explores the individual impacts of Facebook indicators on stock returns, idiosyncratic risk, and stock liquidity. In doing this, the study employs firm-specific Facebook data sourced from Crowd Tangle merged with stock data and financial data of JSE listed firms from 2010 to 2020. Using linear regression and controlling for industry and time fixed effects, results show positive social media sentiments are associated with higher liquidity and lower idiosyncratic risk. However, the volume of social media content is associated with lower liquidity and higher idiosyncratic risk, suggesting that the risk exposure associated with information dissemination offset the benefits of reducing information asymmetry, at least for the sample firms. Further analyses show evidence of the heterogeneous impacts of social media across different types of firms. Overall, the study provides evidence for the role of firm social media activities and public sentiments on stock market performance and highlights social media's predictive and explanatory power in finance. The final study explores the extent to which chief executive officer (CEO) and directors' characteristics impact the probability that a firm adopts social media. Employing logistic regressions on non-financial firms listed on the JSE for 2010 to 2020, the study finds that older directors and executives reduce firms' likelihood of adopting social media. Whereas female directors are positively associated with the probability that firms adopt social media. Further analysis shows that financial resources and business risk may not always make a difference in the influence of director characteristics. While female directors are likely to consider the factors when making social media decisions, the impact of age is not influenced. The study adds to and expand existing literature on board structure and organisational outcomes and offers a novel approach to evaluating the role of directors in firm social media decisions.
- ItemOpen AccessThe relationship between corporate social responsibility and financial performance: evidence from the Johannesburg stock exchange(2022) Sokhela, Hlengiwe; Chamisa, EdwardCorporate Social Responsibility (CSR) is a widely disputed and constantly evolving topic. One of the most recent methods of assessing CSR in South Africa has been through the usage of the Financial Times Stock Exchange/Johannesburg Stock Exchange (FTSE/JSE) Responsible Investment Index. The Johannesburg Stock Exchange (JSE) Socially Responsible Investment Index (SRI Index) was founded in 2004 and was replaced by the FTSE/JSE Responsible Investment Index in 2015. The index evaluates listed firms based on their triple bottom line performance i.e., environment, society, and economy. The index includes companies that are thought to have good CSR policies. This study assesses the effects of CSR on the Corporate Financial Performance (CFP) of firms listed on the JSE that were included in the FTSE/JSE All Share Index (ALSI) as of the 31st of January 2021. This it does by analyzing the stock's financial performance over a five-year period between the 2015 and 2019 financial years. The requirements for stocks to be included in this study is that they must have had an average market capitalization between R2 billion and R100 billion between the 2015 and 2019 financial years and are not part of the real estate sector. The results of the nonparametric (Mann-Whitney) tests show that companies that are part of the FTSE/JSE Responsible Investment Index perform better on average than those that are not included in the index. This conclusion is based on a review of the total return index (TRI), return on equity ratio (ROE), price-earnings ratio (PE), and the market-to-book ratio (MB). The analysis conducted using the net profit margin (NPM) as a measure of financial performance show that there is no relationship between CSR and financial performance. The Mann-Whitney test results where the return on assets (ROA) ratio was used showed a negative relationship between CSR and financial performance.
- ItemOpen AccessThe relative value relevance of book values, operating cash flows, EVA and earnings: A South African perspective(2018) Muzhingi, Taurai; Chamisa, EdwardMost investors would want to know what is included in the price of a share and how far accounting data explain the share price. This study uses the most common measures of financial performance to measure what is explained by the share price. Most analyst briefings use these financial performance measures: book value per share, cash flow per share, earnings per share and most recently the market performance measure, the economic value added (EVA) in the share valuations. The objective of the study is to examine the relationship between the above measures of financial performance as presented in financial statements and the share prices and share returns. If there is a relationship, which measure is most closely related to both share prices and share returns? The study uses data obtained from a balanced sample of 87 companies listed on the Johannesburg Stock Exchange (JSE) during the ten-year period (2005-2014). Both the price and the returns models were used to analyse this financial data to find out which accounting measure has the greatest explanatory power on the share prices and share returns (measured by the R-squared or R 2metric). For the price model, share prices 3 months after the financial yearend were used to allow for the release of financial information. Using the price model, earnings have the highest overall R2 at 56.4%, with book values at 18.4%, EVA at 2.18% and lastly operating cash flows at 1.18%. This effectively means that earnings per share is more value relevant in determining firm value than either book value of equity, EVA and operating cash flows, respectively. Using incremental value relevance, equity book values and earnings explain 65% of the share prices. However, changes in EVA deflated by price have the greatest explanatory power (R 2 at 30%) using the returns model and none of the other measures(earnings and operating cash flows) have a significant relationship with share returns. Overall the results show that both accounting based (book value of equity and earnings) and market based measures (EVA) are value relevant in determining firm value. The results also show that a consideration of more than one variable in determining firm value is more informative than considering each variable separately. EVA should also be used in determining value as it has shown that it explains some of the share prices and returns.