Research Articles (University of Stellenbosch Business School)

Permanent URI for this collection

https://scholar.sun.ac.za/handle/10019.1/686

Browse

Browsing Research Articles (University of Stellenbosch Business School) by Author "Bester, P. G."

Now showing 1 - 2 of 2
  • Thumbnail Image
    Item
    Share buy-backs for a selection of JSE listed companies : an exploratory study
    (AOSIS, 2010) Bester, P. G.; Wesson, N.; Hamman, W. D.
    This study undertook to derive share repurchase trends from a small sample of JSE-listed companies over the nine years, 1999-2008. The study also draws attention to the particular obstacles to be overcome when conducting research into the unique South African share repurchases environment. The study finds that 33 companies made 71 repurchase announcements (47 general and 24 specific) via the Securities Exchange News Service (SENS) over the period July 1999 until financial year-end in 2008. On average, 59,0% of the total number of shares (and 49,3% of the total value) repurchased under a general authority is not included in the 3% SENS announcements. General share repurchases represent 47,9% of total repurchases in volume (and 60,5% in terms of value). The total number of shares repurchased (excluding share trust purchases) by the 33 companies shows that 56,8% were repurchased by subsidiaries and 17,1% were subsequent repurchases by companies from subsidiaries. (In value, these repurchases represent 53,7% and 17,2%, respectively.) This study therefore concludes that research based on only the 3% SENS announcements of general share buy-backs results in significant understating of actual total share buy-back activities, and that the South African share repurchase environment presents unique challenges. The main obstacle for future South African research in this field however is the lack of comprehensive and accurate share repurchase data as supplied by South African financial data sources. This material is based upon work supported financially by the National Research Foundation. Any opinion, findings and conclusions or recommendations expressed in this material are those of the authors and therefore the NRF does not accept any liability in regard thereto.
  • Thumbnail Image
    Item
    Share repurchases : which number of shares should be used by JSE-listed companies when publishing market capitalisation in annual reports?
    (AOSIS, 2008) Bester, P. G.; Hamman, W. D.; Brummer, L. M.; Wesson, N.; Steyn-Bruwer, B. W.
    The legalisation of share repurchases in South Africa since July 1999 introduced additional complexity to financial reporting. The repurchasing of shares by subsidiaries or share trusts has led to a new concept: the number of company shares differs from the number of group shares. Ratios like earnings per share and headline earnings per share are governed by accounting standards and circulars, and prescribe the use of the (weighted) number of group shares. No guidance exists on the calculation of market capitalisation. This article aims to determine the methods used by companies listed on the JSE Securities Exchange South Africa (JSE) to calculate their number of shares when publishing market capitalisation. It was found that only about 25% of companies participating in share repurchases and publishing market capitalisation in their annual reports calculated market capitalisation based on the number of group shares. About 75% of the companies did not calculate their market capitalisation based on the number of group shares (i.e. they omitted to deduct subsidiary repurchases and/or trust consolidations in their calculation of the number of shares). It was also found that the JSE, when compiling the Top 40 index, calculates market capitalisation based on the number of company shares (i.e. ignoring subsidiary repurchases and trust consolidations). Accounting guidance is needed on the reporting of market capitalisation to ensure that this aspect is not overstated by the reporting entities.