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The effect of industrial strikes on the value of shares listed on the Johannesburg Stock Exchange

The effect of industrial strikes on the value of shares listed on the Johannesburg Stock Exchange The objective of this study is to determine the effect of strikes on the share values of a sample of companies listed on the Johannesburg Stock Exchange during the period 1984–1993. The results indicate that strikes do have a negative effect on share prices. The costs of a strike do not appear to be transitory since the losses incurred during the strike period are not counterbalanced by positive excess returns after its conclusion. The findings tend to support the notion that capital markets are usually able to anticipate whether an impending contract deadline will result in a strike or settlement. In the prestrike period, however, the stock market consistently underestimates the cost of a strike to shareholders, as demonstrated by the fact that nearly 70% of the total decline of returns (3,64%) occurs after the strike is announced. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Investment Analysts Journal Taylor & Francis

The effect of industrial strikes on the value of shares listed on the Johannesburg Stock Exchange

Bhana, Narendera
Investment Analysts Journal , Volume 26 (44): 7 – Jun 1, 1997
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Publisher
Taylor & Francis
Copyright
© 1997 Taylor and Francis Group, LLC
ISSN
2077-0227
eISSN
1029-3523
DOI
10.1080/10293523.1997.11082366
Publisher site
See Article on Publisher Site

Abstract

The objective of this study is to determine the effect of strikes on the share values of a sample of companies listed on the Johannesburg Stock Exchange during the period 1984–1993. The results indicate that strikes do have a negative effect on share prices. The costs of a strike do not appear to be transitory since the losses incurred during the strike period are not counterbalanced by positive excess returns after its conclusion. The findings tend to support the notion that capital markets are usually able to anticipate whether an impending contract deadline will result in a strike or settlement. In the prestrike period, however, the stock market consistently underestimates the cost of a strike to shareholders, as demonstrated by the fact that nearly 70% of the total decline of returns (3,64%) occurs after the strike is announced.

Journal

Investment Analysts Journal – Taylor & Francis

Published: Jun 1, 1997

References

  • Escalation of commitment in individual and group decision making
  • The impact of strikes on shareholder equity
  • Take-over announcements and insider trading activity on the Johannesburg Stock Exchange
  • Risk estimation in the thinly traded JSE environment
  • Understanding and conducting event studies
  • Anglo American's Leslie Boyd speaks bluntly on unions, wages, investment
  • Strike proneness and characteristics of industrial relations systems at the organizational level: A discriminant analysis
  • Friction in the trading process and the estimation of systematic risk
  • Risk measurement when shares are subject to infrequent trading
  • The worker and the profitability of the strike
  • Investors look elsewhere
  • Counting the costs of strikes: Who pays when management and labour can't play ball?
  • Strikes cost more than you think
  • The determinants of strikes in the United States
  • Dividend policy, growth, and the valuation of shares
  • The predictability of strikes: Evidence from the stock market
  • Output and strike activity in US manufacturing: How large are the losses?
  • Higher pay the answer—trade union leader claims wage rises lead to economic gains
  • Transaction costs and the small firm effect