Market segmentation and the cost of equity of companies listed on the Johannesburg Stock Exchange

Correia, C.; Uliana, Enrico

doi:10.1080/10291954.2004.11435109

Cited by 8 publications

(7 citation statements)

References 12 publications

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“…The study found that the market premium based on an arithmetic mean was 6.8%. Generally, studies of historical market premiums in the 1990s found risk premiums to be in order of 7 to 10% (see Uliana 2004 andMcLeod 1999). The results of the PWC survey ( 2005) are generally consistent with the results or this survey, with similar use made mainly and equally between Bloomberg and Cadiz/UCT Financial Risk Service, and slightly less use of McGregor.…”

Section: Figure 7 the Use Of Beta Servicessupporting

confidence: 60%

An analysis of cost of capital, capital structure and capital budgeting practices: a survey of South African listed companies

Correia

Cramer

2008

Meditari Accountancy Research

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This study employs a sample survey to determine and analyse the corporate finance practices of South African listed companies in relation to cost of capital, capital structure and capital budgeting decisions.The results of the survey are mostly in line with financial theory and are generally consistent with a number of other studies. This study finds that companies always or almost always employ DCF methods such as NPV and IRR to evaluate projects. Companies almost always use CAPM to determine the cost of equity and most companies employ either a strict or flexible target debt‐equity ratio. Furthermore, most practices of the South African corporate sector are in line with practices employed by US companies. This reflects the relatively highly developed state of the South African economy which belies its status as an emerging market. However, the survey has also brought to the fore a number of puzzling results which may indicate some gaps in the application of finance theory. There is limited use of relatively new developments such as real options, APV, EVA and Monte Carlo simulation. Furthermore, the low target debt‐equity ratios reflected the exceptionally low use of debt by South African companies.

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Section: Figure 7 the Use Of Beta Servicessupporting

confidence: 60%

An analysis of cost of capital, capital structure and capital budgeting practices: a survey of South African listed companies

Correia

Cramer

2008

Meditari Accountancy Research

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“…In contrast, Namibia has a value of 17.28%. While these values are high, Correia and Uliana (2004) find costs of equity using a one-factor CAPM on a similar scale. However, there is considerable dispersion in the cost of equity Notes: (1) Annualised cost of equity estimates generated at 12/2008 from the total risk premium.…”

Section: Average Returns In the Sub-saharan African Marketsmentioning

confidence: 98%

Sector level cost of equity in African financial markets

Hearn¹,

Piesse²

2009

Emerging Markets Review

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This paper assesses the effectiveness of Liu (2006) metrics in measuring illiquidity within a multifactor CAPM pricing model. Costs of equity are estimated using this model for the major sectors within Africa's larger equity markets: Morocco, Tunisia, Egypt, Kenya, Nigeria, Zambia, Botswana and South Africa. In all countries, the cost of equity is found to be highest in the financial sector and lowest in the blue chip stocks of Tunisia, Morocco, Namibia and South Africa. At an aggregate level, Nigeria and Zambia have the highest cost of capital.

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“…The date per Table IV can be represented in a 3 × 3 matrix. Table V compares the emphasis companies place on disclosures with respondents’ view on the perceived importance of those disclosures (Gold et al , 2012; Correia et al , 2013; Naynar, 2016). The most notable perception gaps involve C 1 , C 2 , C 3 and C 8 , whereas less material differences are reported for C 7 , C 9 , C 10 and C 11 .…”

Section: Resultsmentioning

confidence: 99%

Expectation gap between preparers and stakeholders in integrated reporting

Naynar

Ram

Maroun

2018

MEDAR

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Purpose This paper aims to explore the emphasis placed on certain integrated reporting themes by financial services companies and stakeholders’ perception of the importance of these themes to ascertain if a perception gap exists. The study also considers if the perception gap is affected by user sophistication. Design/methodology/approach This paper uses a mixed methods approach. First, the integrated reports are analysed to construct interpretively a list of disclosure themes. The frequency of these disclosures themes is determined to give a sense of the emphasis placed on these disclosures by a sample of integrated reporters. Second, a questionnaire is compiled to gauge the perceived importance of the disclosure themes by a proxy group of sophisticated and unsophisticated investors. Third, the results are subject to factor analysis to determine the statistically significant disclosure themes. Differences between the emphasis placed on these disclosures by companies and their perceived importance in the eyes of users are used to outline the nature of a perception gap. Finally, the perceived importance of the integrated reporting themes between the sophisticated and unsophisticated respondents is determined using a Mann–Whitney U test. Findings This paper shows that a perception gap has developed because companies do not fully understand what information is valued by their stakeholders. In addition, this study demonstrates that sophistication has an effect on the type of disclosures which are valued by users and the manner in which the disclosures are presented. Originality/value This research adds a new dimension to prior literature by introducing the idea of a perception gap (well-known in a financial reporting and assurance context) to integrated reporting. It also shows that differences in stakeholders’ sophistication should be taken into account when companies prepare their integrated reports.

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Market segmentation and the cost of equity of companies listed on the Johannesburg Stock Exchange

Cited by 8 publications

References 12 publications

An analysis of cost of capital, capital structure and capital budgeting practices: a survey of South African listed companies

An analysis of cost of capital, capital structure and capital budgeting practices: a survey of South African listed companies

Sector level cost of equity in African financial markets

Expectation gap between preparers and stakeholders in integrated reporting

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