Original Research

Significant changes in dividend policy and insider trading activity on the Johannesburg Stock Exchange

Narendra Bhana
South African Journal of Business Management | Vol 22, No 4 | a901 | DOI: https://doi.org/10.4102/sajbm.v22i4.901 | © 2018 Narendra Bhana | This work is licensed under CC Attribution 4.0
Submitted: 17 October 2018 | Published: 31 December 1991

About the author(s)

Narendra Bhana, Graduate School of Business, University of Durban-Westville, South Africa

Full Text:

PDF (1MB)

Abstract

The objective with this article was to determine whether insider trading related to unannounced dividend policy changes provided abnormal returns for shares listed on the Johannesburg Stock Exchange (JSE). The results indicate that insiders as a group seem to exhibit 'remarkable timing ability'. Significant changes in insider trading activity were detected during the six-month period prior to the resumption (omission) announcement. Company insiders trading prior to dividend changes announcements earned consistently large positive abnormal returns (avoid large negative abnormal returns). It is recommended that company insiders be required to make public the market positions they take in their company's shares. This can be expected to reduce the abnormal returns derived from insider trading and will also contribute towards improving the efficiency of the JSE.

Keywords

No related keywords in the metadata.

Metrics

Total abstract views: 1508
Total article views: 528

 

Crossref Citations

1. The reaction of bank share prices on the Johannesburg Stock Exchange to increased capital requirements
N. Bhana
Investment Analysts Journal  vol: 24  issue: 42  first page: 19  year: 1995  
doi: 10.1080/10293523.1995.11082352