This study investigates whether JSE-listed takeover target companies earn abnormal returns in the run-up to public announcements of planned takeovers. We compute the average cumulative abnormal returns (ACAR) over 21 days preceding the announcement of a takeover for 57 takeovers occurring between January 2005 and June 2014 and then conduct interviews to offer insight into the causes of abnormal returns preceding each takeover announcement. Results indicate that shares in takeover target companies accumulate a significant ACAR (9.03%) during the 21 trading days prior to the first public announcement. Findings also suggest plausible legal explanations for abnormal returns, potentially contradicting suggestions in a strand of the literature that ACAR constitutes prima facie evidence of illegal insider trading. Yet, the high ACAR suggests evidence of information leaks prior to announcement, which casts doubt on the effectiveness of South African insider trading law.
Sovereign credit ratings measure a country's ability to meet its financial obligations. It is imperative to consider the specific determinants of ratings as they influence the decisions of investors and other role players. The main focus of this research is to investigate whether the determinants identified in literature are significant for African sovereigns as well. The determinants of sovereign credit ratings will be identified by making use of panel and ordered response models. Data of 27 African countries are included over a period of five years. Some differences occur between findings from literature which mainly focuses on developed and developing countries, and the findings of this study, focusing on Africa.
The study assesses the role of mobile phones and mobile banking in decreasing inequality in 52 African countries. The empirical procedure involves first, examining the income-redistributive effect of mobile phone penetration and then investigating the contribution of mobile banking services in this relationship. The findings suggest an equalizing income-redistributive effect of 'mobile phone penetration' and 'mobile banking', with a higher income-equalizing effect from mobile banking compared to mobile phone penetration. Poverty alleviation channels explaining this difference in inequality mitigating propensity are discussed.
We revisit the validity of long-run purchasing power parity in the West African Monetary Zone for quarterly data spanning from 1960 up to 2014. By allowing for unknown endogenous structural breaks in the data, the evidence indicates the existence of cointegration between nominal exchange rates and prices in all the countries. The results support that the PPP holds and can serve as a benchmark for exchange rate modeling in the sub-region. However, the diverse speeds of adjustment towards the equilibrium relationship suggests to exchange rate policymakers to take into account individual economic, social and political circumstances of the countries. We discuss the implications of these findings to guide policy choices in the monetary zone.