Post-recession share repurchase behaviour by JSE-listed companies: transparent or not?
Journal of Accounting in Emerging Economies
ISSN: 2042-1168
Article publication date: 27 July 2020
Issue publication date: 17 August 2020
Abstract
Purpose
Share repurchases are increasingly employed in South Africa. Disclosure on share repurchases in annual reports is poor, and a high percentage of share repurchases are not announced in real time on the Johannesburg Stock Exchange (JSE). A comprehensive database of share repurchases by JSE-listed companies has been created up to 2009, but post-recession repurchase behaviour is not known. This study aims to examine South African share repurchase behaviour (activity, repurchase entity, repurchase type and transparency) in the post-recession period and compare this to the 2000–2009 period.
Design/methodology/approach
Comprehensive share repurchase data for all JSE-listed companies (excluding those in the basic materials and financial industries) were obtained by scrutinising annual reports and JSE announcements.
Findings
The repurchasing of shares reached a peak during the financial recession of 2008/2009, with share repurchases stabilising at a lower level post-recession. Repurchases executed by subsidiaries have decreased post-recession, probably owing to the introduction of dividends tax. However, 45% of the share repurchase value was not announced via the JSE (compared to 22% in 2000–2009).
Practical implications
Real-time JSE announcements of all share repurchases are required to improve transparency.
Originality/value
Owing to low announcement rates, a lack of transparency relating to share repurchases was observed in South Africa post-recession. Enhanced corporate governance requirements could improve transparency.
Keywords
Acknowledgements
A draft version of this paper was presented at the AAEE Workshop (held in December 2019 in Cape Town). The authors would like to thank Prof Shahzad Uddin (JAEE editor-in-chief) and the other workshop participants for their contributions in improving the paper.
Citation
Steenkamp, G. and Wesson, N. (2020), "Post-recession share repurchase behaviour by JSE-listed companies: transparent or not?", Journal of Accounting in Emerging Economies, Vol. 10 No. 3, pp. 465-486. https://doi.org/10.1108/JAEE-02-2020-0040
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited