n African Finance Journal - The impact of Black Economic Empowerment transactions on shareholder wealth and firm profitability : evidence from the JSE

Special issue 1
  • ISSN : 1605-9786


This study assesses the impact of Black Economic Empowerment announcements on short-term shareholder wealth and firm profitability on JSE listed firms. We find evidence that information about transactions is incorporated into the share price 20 days prior to the announcement day. However, cumulative abnormal returns for the entire period remain negative, indicating negative shareholder wealth effects. Surprisingly, investors tend to react more negatively to transaction announcements during bull market conditions, with daily average abnormal returns of -3.4%. We also document evidence that the listing age of a firm, the firm's growth prospects and overall market conditions are major determinants of short-term profitability.

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