| dc.description.abstract | Motivated by the number of firms that migrate from the Alternative Exchange (AltX) to the
JSE main board, this research undertakes to examine the role and the functions of the AltX and
its contribution to the development of the small and medium-sized enterprises (SMMEs) in
South Africa over the period from January 2004 to December 2015. This study seeks to explore
the performance of the firms that have migrated from the AltX to the JSE main board, as well
as the attributes that contribute to a successful migration. The study emerges by computing
risk, return, risk-adjusted performance and liquidity statistics of the firms that migrated from
the AltX to the JSE main board over the period of the research since their respective listings
on the AltX. In the preliminary tests conducted in this study, the excess returns of the sample
firms were regressed against the market risk premium using ALSI as the market proxy. It is
discovered that the beta coefficients estimated by the regressions are statistically insignificant.
This indicates that the firms listed on the AltX have insignificant correlation with the firms
listed on the JSE main board. Therefore, the ALSI could not be used as a performance
benchmark for the sample firms in this research.
Subsequently, the research evaluates the market response before and after the announcement
date and the actual migration date of the firms that have migrated from the AltX to the JSE
main board. The reasons why this research investigates the impact of announcement and actual
migration separately is due to the observation that the period between announcement date and
migration date is usually more than a month and investors might have different reactions
towards these two mentioned events. Moreover, this is the first research that has investigated
the impact corporate reaction on both migration announcement date and the actual migration
date of the firms from the AltX to the JSE main board. The results reveal that there are
significant average abnormal returns and average abnormal turnovers reaction around
migration announcement date/actual migration date. The findings suggest that both the
migration announcement and actual migration of the firms from the AltX to the JSE main board
have produced significant abnormal returns.
Moreover, the research evaluates the performance of the firms that have migrated from the
AltX to the JSE main board against their comparable peers. The performance evaluation is
conducted in two folds. Firstly, the evaluation is conducted in order to assess the financial
position of the AltX sample firms before their migration to the JSE main board. Secondly, the
post migration performance evaluation is conducted in order to classify each of the sample
firms either as a success or as a failure after their migration to the JSE main board. The results
reveals that, out of 20 sample firms only 13 firms have been categorised as successful post their
migration from the AltX to the JSE main board, while the remaining 7 firms are categorised as
unsuccessful post migration.
Finally, this research investigates the attributes that differentiate the AltX firms that are likely
to be successful and those that are unlikely to be successful after their migration to the JSE
main board. To achieve this, Multivariate Discriminant Analysis (MDA) model developed by
Altman (1968) is employed. The results reveals that, the model is able to classify 90% of the
original cases and 85% of the cross-validated cases perfectly. Moreover, the model has
identified net profit margin, current ratio and return on capital invested as the most important
financial ratios in distinguishing the successful firms from unsuccessful firms post migration
from the AltX to the JSE main board. | en_US |
