Abstract:
The South African government introduced the Black Economic Empowerment (BEE) as
an intervention to resolve economic imbalances. In furthering inclusivity in the
previously exclusive sectors, like Mining, the BEE legislations and Mining Charter were
introduced to benefit the HDSA. The study addressed a significant gap in BEE
research, which is important within the South African context, as the country currently
reviews progress after the initial 20 years of democratic dispensation.
The research examined the share price performance of mining stocks listed on the JSE
by tracking their share price performance after announcements relating to black
empowerment transactions. The objectives of the research were to, first, determine
whether announcements of BEE transactions lead to better shareholder wealth
creation in the South African mining sector, second, to determine the impact of these
announcements on Old and BEE mining companies that were listed on the JSE post-
1994, third, to determine whether the early BEE announcements made before the
release of the Mining Charter in September 2010 had a greater positive impact on the
Cumulative Abnormal Returns (CARs) of Mining companies compared to those made
after the amendment to legislation.
The research employed an event study methodology to analyse a sample of 26 mining
companies that made a total of 241 qualifying announcements from January 2000 to
November 2014.
The results of the study showed negative impact on the CARs of the mining
companies. It was noted that the old mining companies that existed before 1994 had
better average abnormal return than the BEE companies. Further, the results showed
that the Average Abnormal Returns (AARs) of the BEE announcements made prior to
the Mining Charter had greater AARs than those made after the implementation. In
sum, the BEE announcements had largely a negative impact on share performance of
the mining companies.
