The short-term effect on shareholder wealth of banking mergers and acquisitions during periods of real economic expansion and contraction
- Authors: Kerr, Gordon Roy
- Date: 2011
- Subjects: Bank mergers , Consolidation and merger of corporations , Business cycles , Corporations -- Investor relations , Stockholder wealth , Rate of return
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:1108 , http://hdl.handle.net/10962/d1013442
- Description: Controversy currently exists over whether abnormal returns (ARs) are earned by shareholders of bidder and target banks through a Merger and Acquisition (M&A). The state of the economy in which the firms operate is often mentioned as a reason for firms engaging in M&As, however, the extent to which economies influence the ARs of shareholders is unknown. Following MacKinlay (1997), the aim of this study is to determine the average ARs earned or lost by shareholders of several banks around the world during an M&A. The results obtained may indicate that shareholders of bidding firms consider an M&A to be a wealth-destroying event irrespective of the state of the economy. It would seem that target firms’ shareholders consider M&As to be wealth-creating events when they occur during a period of real economic expansion. However, during periods of real economic contraction, target firms’ shareholders consider M&As to be wealth-destroying events. Thus, the state of an economy during an M&A can affect average ARs considerably.
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- Date Issued: 2011
Mores, fault and fides: are these acceptable criteria when income tax deductions are claimed
- Authors: Swanepoel, Marius G
- Date: 2007
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:889 , http://hdl.handle.net/10962/d1001643
- Description: The two “pillars” on which taxable income is based are the definition of “gross income” in section 1 of the Income Tax Act, 58 of 1962, and the “general deduction formula” comprising the preamble to section 11, section 11(a) and section 23(g) of the Act. Many of the terms used in these sections are not defined in the Income Tax Act. Case law in relation to these sections reveals that morality issues, the negligence of taxpayers and the good faith of taxpayers have from time to time been treated as relevant considerations by the courts, both abroad and in South Africa, in allowing or disallowing deductions from the gross income of taxpayers. In some instances this occurred apparently unwittingly. In other instances, earlier decisions were followed without a thorough consideration of the correctness of the underlying reasoning or of the criteria which were applied in the earlier decisions. In relation to the definition of “gross income”, however, fides, mores and fault have not been a consideration. In CIR v Delagoa Bay Cigarette Co Ltd 1918 TPD 391 Bristowe, J stated: “I do not think it is material for the purpose of this case whether the business carried on by the company is legal or illegal.” There were a number of cases heard in relation to income from illegal activities (for example, COT v G, 1981 (4) SA 167 (ZA), 43 SATC 159, and ITC 291, 7 SATC 335, which related to the misappropriation of funds, ITC 1545, 54 SATC 464, which dealt with the proceeds of the sale of stolen diamonds and ITC 1624, 59 SATC 373, which dealt with overcharging customers). In these cases, the question turned on whether or not the amounts were received by the taxpayers for their own benefit and therefore to be included in gross income, or whether the taxpayers incurred a concomitant liability to repay the amounts, and did not involve the question of fides, mores or fault. The research concludes that, providing an even-handed approach is applied to both income and expense considerations, fides and mores may continue to play a role as a useful yardstick in this context. However, that fault, particularly the causal negligence of taxpayers in the process of sustaining a loss or incurring expenditure whilst conducting their income generating operations, has effectively been jettisoned as an irrelevant consideration, is a salutary development which has contributed to legal certainty.
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- Date Issued: 2007
The yield curve as a forecasting tool : does the yield spread predict recessions in South Africa?
- Authors: Khomo, Melvin Muzi
- Date: 2006
- Subjects: Recessions -- South Africa , Monetary policy -- South Africa , Economic development -- South Africa , Economic indicators -- South Africa , Business cycles -- History -- 20th century , Business cycles -- South Africa , South Africa -- Economic conditions
- Language: English
- Type: Thesis , Masters , MCom
- Identifier: vital:1040 , http://hdl.handle.net/10962/d1004722 , Recessions -- South Africa , Monetary policy -- South Africa , Economic development -- South Africa , Economic indicators -- South Africa , Business cycles -- History -- 20th century , Business cycles -- South Africa , South Africa -- Economic conditions
- Description: This paper examines the ability of the yield curve to predict recessions in South Africa, and compares its predictive power with other commonly used variables that include the growth rate in real money supply, changes in stock prices and the index of leading economic indicators. The study also makes an attempt to find out if monetary policy explains the yield spread's predictive power with regards to future economic activity. Regarding methodology, the standard probit model proposed by Estrella and Mishkin (1996) that directly estimates the probability of the economy going into recession is used. Results from this model are compared with a modified probit model suggested by Dueker (1997) that includes a lagged dependent variable. Results presented in the paper provide further evidence that the yield curve, as represented by the yield spread between 3-month and IO-year government paper, can be used to estimate the likelihood of recessions in South Africa. The yield spread can produce recession forecasts up to 18 months, although it's best predictive power is seen at two quarters. Results from the standard probit model and the modified pro bit model with a lagged dependent variable are somewhat similar, although the latter model improves forecasts at shorter horizons up to 3 months. Compared with other indicators, real M3 growth is a noisy indicator and does not provide much information about future recessions, whilst movements in the All-Share index can provide information for up to 12 months but does not do better than the yield curve. The index of leading economic indicators outperforms the yield spread in the short run up to 4 months but the spread performs better at longer horizons. Based on the results from the study, it appears that changes in monetary policy explain the yield spread's predictive power. This is because the yield spread loses its explanatory power when combined with a variable representing the monetary policy stance of the central bank.
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- Date Issued: 2006