Corporate Governance and Incidences of Listing Suspension by the JSE Securities Exchange of South Africa: An Empirical Analysis

The International Journal of Accounting, 43 (1): 28-44, 2008

Posted: 2 May 2018

See all articles by Musa Mangena

Musa Mangena

University of Nottingham Business School

Eddie Chamisa

University of Cape Town - Department of Finance and Tax

Date Written: March 2018

Abstract

In this study, we examine the association between corporate governance structures and incidences of listing suspension from the JSE Securities Exchange of South Africa (JSE). Using a matched-pairs research design, we compare 81 firms suspended between 1999 and 2005 to an equal number of control firms matched in terms of time, size and industry. Employing a conditional logistic model, we find that the likelihood of suspension is higher in firms with a smaller proportion of non-executive directors, without an audit committee, with greater block share ownership and higher gearing. Further analysis of block share ownership into institutional and non-institutional investors provides mixed results. While we find a positive association between suspension and non-institutional investors, we observe no association with institutional investors. No association is detected for board size, role duality, directors' share ownership, auditor quality and return on assets. Given the paucity of studies examining listing suspension from stock exchanges and corporate governance mechanisms, these findings contribute to the literature. Additionally, the dearth of research on corporate governance in developing countries suggests that our findings have important implications for policy-makers in these countries as they endeavour to improve corporate governance.

Keywords: Corporate Governance; Listing Suspension; JSE Securities Exchange; Developing Countries; South Africa

Suggested Citation

Mangena, Musa and Chamisa, Edward Elae, Corporate Governance and Incidences of Listing Suspension by the JSE Securities Exchange of South Africa: An Empirical Analysis (March 2018). The International Journal of Accounting, 43 (1): 28-44, 2008, Available at SSRN: https://ssrn.com/abstract=3162575

Musa Mangena (Contact Author)

University of Nottingham Business School ( email )

United Kingdom

Edward Elae Chamisa

University of Cape Town - Department of Finance and Tax ( email )

Private Bag X3
Rondebosch, 7701
South Africa

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