Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245219 
Year of Publication: 
2019
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 7 [Issue:] 1 [Publisher:] Taylor & Francis [Place:] Abingdon [Year:] 2019 [Pages:] 1-17
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
In South Africa, corporate finance events receive extensive coverage in the media. However, there are only a few studies examining the behaviour of share prices in response to such events. Using the event study methodology commonly used in corporate finance research, the reaction of a sample of large- and small-cap stocks to selected corporate finance events (such as dividend and earnings announcements, stock splits and accounting policy changes) was analysed. Results show that there is a rapid stock price adjustment immediately post-announcement, but the time taken varies depending on the nature of the event and company size. This may have profound implications on discretionary portfolio management: fund managers should find it beneficial from a diversification standpoint. Exiting from heavy concentrations in large-cap stocks and diversifying into smaller cap stocks could offer the stability of portfolio returns against adverse events like Steinhoff's accounting fraud.
Subjects: 
G3$aG14
total/free-float
market capitalisation
corporate finance events
semi-strong EMH
size anomaly
JEL: 
G3
G14
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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