Does contrarian trading by directors provide a signal to outside investors for future abnormal returns in South Africa

dc.contributor.advisorGunn, Ralphen
dc.contributor.emailichelp@gibs.co.zaen
dc.contributor.postgraduateMokale, Tebogoen
dc.date.accessioned2013-09-06T18:37:59Z
dc.date.available2011-05-25en
dc.date.available2013-09-06T18:37:59Z
dc.date.created2010-11-10en
dc.date.issued2010-05-25en
dc.date.submitted2011-05-22en
dc.descriptionDissertation (MBA)--University of Pretoria, 2010.en
dc.description.abstractDirectors of listed companies earn abnormal returns by trading in a contrarian manner. This research report investigated whether outside investors can earn abnormal returns by following director contrarian trades. The returns to directors and outsiders, following a director trade were analysed using the event study methodology. The event study methodology utilised director trading information from SENS announcements on the JSE Securities Exchange, daily share prices, betas and price to book values for the selected companies, and daily all share index prices. The focus of the analysis was the post trade Cumulative Average Abnormal Returns (CAAR), in the 20 days following the director trade. The overall CAAR for all transactions was a statistically significant but economically insignificant 0.43%. When viewed from a transaction type perspective, the CAAR was 0.72% and 0.44% for purchases and sales transactions respectively. This study shows that while directors of listed South African companies do earn abnormal returns, they do not do so while consistently trading in a contrarian manner. In fact, transactions not deemed contrarian generated higher abnormal returns for directors. In addition, the study shows that outside investors do not earn abnormal returns by mimicking directors, and actually, their following of director trades generates the abnormal returns for directors. Copyrighten
dc.description.availabilityunrestricteden
dc.description.departmentGordon Institute of Business Science (GIBS)en
dc.identifier.citationMokale, T 2010, Does contrarian trading by directors provide a signal to outside investors for future abnormal returns in South Africa, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://hdl.handle.net/2263/24877 >en
dc.identifier.otherF11/390/agen
dc.identifier.upetdurlhttp://upetd.up.ac.za/thesis/available/etd-05222011-111043/en
dc.identifier.urihttp://hdl.handle.net/2263/24877
dc.language.isoen
dc.publisherUniversity of Pretoriaen_ZA
dc.rights© 2010, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretorien
dc.subjectUCTDen_US
dc.subjectAbnormal returnsen
dc.subjectDirector tradingen
dc.subjectContrarian tradingen
dc.titleDoes contrarian trading by directors provide a signal to outside investors for future abnormal returns in South Africaen
dc.typeDissertationen

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