Analysing the impact of cross-listing on firm value for Johannesburg stock exchange companies listed on the Namibia stock exchange
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Date
2021
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Publisher
University of Namibia
Abstract
When companies are looking to raise funds for growth and increasing firm value, equity
and debt are the only options at their disposal. In raising equity, companies can sell their
stock to the public, within their domestic market or through cross-listing on another
stock exchange which may be domestic or foreign. Accordingly, research on the impact
of cross-listing on liquidity and firm value in the African context, has been growing.
However, in Namibia there has been no study that comparatively assessed the impact of
cross-listing on firm values of both cross-listed and locally listed stocks. Therefore, this
study analysed the asset value, liquidity, and profitability of locally listed and cross listed assets on the Namibia Stock Exchange (NSX). The study used secondary data
from publicly available financial indicators from 32 NSX listed companies in the period
2019 to 2021. The study found that the average 1isting time on for stocks on the NSX
was 15.78 years. The findings also showed that 86.5% of the stocks were listed on the
NSX Main board, of which 45.9% were cross listed and 40.5% were locally listed. The
findings indicated that the cross listed stocks on the Capital Development Board (DevX)
had the lowest Market Capitalisation averaging N$4 l 4 million. The average asset values
of cross-listed firms were at least 4.5 times the value of those locally listed. The study
also found statistically significant differences between locally listed and cross-listed
assets, with respect to financial performance indicators like Asset value, Market
capitalisation, 3-Year Beta and liquidity. While there were no significant associations
with respect to Return on Shareholder Funds. The study concluded that cross-listing in
the Namibian context can be grouped into two types, one which is inclined inwards and
another one outward. The inward cross-listing is recommended for those companies
seeking to raise local funds through the NSX, while the outward cross-listing is
recommended for local firms looking to raise capital or increase their stock value by
listing on the JSE Africa Development board
Description
A thesis submitted in partial fulfilment of the requirements for the degree of master in business administration- Finance
Keywords
Cross-listing, NSX, JSE, Firm value, Profitability, Liquidity