The Effects of Labour Strikes on the Share Returns of JSE Top 40 Companies


  • Moatlhodi Ramogwera Maungwa North-West University
  • Sune Ferreira North West University


labour strikes, JSE, event methodology, global financial crisis, unemployment, stock exchange, investor confidence, investment, minimum wage


Labour strikes are a platform that enables workers to demonstrate their disagreement and/or their dissatisfaction towards their employer, concerning labour relation issues such as remuneration, working conditions and employee benefits. Labour strikes in South Africa date back to 1922, post the Anglo-Boer war of 1899-1902, within the mining sector and have since become the fabric of our society in correcting historic socio-economic ails of unemployment, minimum wages and inequality. The occurrence of global financial crises of 2008/2009 exposed South Africa's well-hidden vulnerabilities of poverty, unemployment and inequality and resulted in a significant rise in the number of labour strikes. Therefore, the article analyses the effect that labour strikes between 2010-2017 have on the share return of companies that were list on the Johannesburg securities exchange (JSE) index during this timeframe. The results indicate that resolve of protected and unprotected labour strikes affects the share return of JSE Top 40 companies. From an investment perspective, it can be concluded that labour strikes can have severe effects on the share returns of companies listed on a stock exchange. Thus, influencing investor confidence in those companies experiencing the labour strike.


Ang, A., Goetzmann, W.N. & Schaefer, S. M. 2011. Review of the efficient market theory and; Evidence Implications for Active Investment Management. Date of access: 18 Sept. 2016.
Becker, B. & Olson (1986). The impact of strikes on shareholder equity. ILR Review, 39(3): 425 – 438.
Bernstein, L. P. & Damodaran, A. 1998. Investment Management. New York: John Wiley & Sons, inc.
Bhana, N. 1997. The effects of industrial strikes on the value of shares listed on the Johannesburg Stock Exchange. Investment Analysts Journal, 44(1): 43-49.
Boehmer E., Musumeci J. and A. Poulsen 1991. Event-study methodology under conditions of event-induced variance. Journal of Financial Economics, 30(2): 253–272.
Brooks, C. 2014. Introductory econometrics for finance. 3rd ed. United Kingdom: Cambridge University press.
Brown, S. J. & Warner, J. B. 1985. Using daily stock returns: The Case of event studies. Journal of Financial Economics, 14, 3-31.
Brown, G. R. 1983. Understanding and conducting event studies. Journal of Business Finance & Accounting, 10(4): 503 – 704. Date of access: 12 Sep. 2019.
Campbell, J., Lo, A. & Mackinly (1997). The Econometrics of Financial Markets. United Kingdom. Princeton University Press.
Davidson, W., Worrell, D. & Garrison, S, 1988. Effect of strike activity on firm value. The academy of Management Journal, 31(2): 387- 394.
Department of labour see South Africa. Department of Labour.

De Wet, J. 2012. The financial impact of strikes: A worker’s perspective. Corporate Ownership and control, 9(4): 400-407.
DiNardo, J. & Hallock, K. F. 2000. When unions “Mattered”: Assessing the impact of strikes on financial markets: 1925-1937. Date of access: 11 Aug. 2019.
Eaton, B. 1972. The worker and the profitability of the strike. Industrial and labour relations review, 26: 670 -679.
Erlien, M. 2011. Earnings announcements and Stock returns – A study of efficiency in the norwegian capital market. Universitetet I Stavanger. (Thesis – Masters).
Fama, E.1991. Efficient capital markets: II. The Journal of Finance, 46(5): 1575-1617.
Gilson, R. L. & Black, B. S. 2003. The Law and Finance of Corporate Acquisitions. 2nd Ed. New York. Foundation.
Greer, C., Martin, S. & Reusser, T. 1980. The effect of strikes on shareholder returns. Journal of Labour Research, 1(2): 217-218.
ILO (Industrial Action Report). 2016. Annual industrial action report international labour organization 2016. World Employment Social Outlook. International Labour Organization. Date of access: 15 Jun. 2017.
ILO (Industrial Action Report). 2017. Annual industrial action report international labour organization 2016. World employment social outlook. International Labour Organization. Date of access: 6 Jun. 2017.
Hicks, J. 1932. The theory of wages. London: MacMillan.
ILO (International Labour Organisation). 2015. Collective bargaining. A policy guide. Date of access: 15 Jan. 2019.

Jorge, J. & Adams, S. 2018. Industrial action in 2017: A zero-sum game? . Date of access: 06 Dec. 2019.
Kothari, S. P., & Warner, J. B. 2006. The econometrics of event studies. Date of access: 29 Aug. 2016.
Mas, A. 2008. Labour unrest and the quality of production: Evidence from the construction equipment resale market. Review of Economic Studies, 75(2): 229-258.
Massey, A. and Miller, S.J. 2006. Tests of hypotheses using statistics. Mathematics Department. Brown University. Providence.
McWilliams, A. & Siegel, D. 1997. Event studies in management research: Theoretical and empirical Issues. The Academy of Management Journal, 40(3): 626-657.
Miller, M. & Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. Journal of Business, 34(4), 411-433.
Nelson, M., Amoako-Adu, B. & Smith, B. 1994. Impact of labour strikes on equity values; Canadian Evidence. Journal of Economics and Business, 46():153-165.
Neumann, G. R. (1980). The predictability of strikes: Evidence from the stock market. International Labour Relations Review, 33(4), 525–535.
Ngidi, N. 2011. Market reaction to industrial actions in South Africa. Johannesburg. University of the Witwatersrand. (Dissertation – Masters).
Odendaal, N. 2014. SA one of the world’s most violent, strike-prone countries. Date of access: 20 Feb 2021.
Norman, H. 1966. The revolt on the rand. 1st ed. Johannesburg. Blue Crane Books
Seedat, A. 2013. The effects of strikes in the South African gold mining industry on shareholder value. Dissertation. University of the Witwatersrand.

Sapa.2013. Labour unrest leads to weak output growth. Available at: -unrest-leads-to-weak-outputgrowth?filter=all_comments Date of access: 17 Dec. 2019.
Tabak, D. 2010. Use and misuse of event studies to examine market efficiency. Date of access: 24 Sep. 2019.
Tremblay, F. 2006. Embedded value calculation for a life insurance company. Date of access: 20 Jan. 2021
Urbach, J. 2010. The nature causes and outcomes of strike action in SA. Moneyweb. Date of access: 20 Jun. 2016
Woon, W.S. 2004. Introduction to the event study methodology. Effect of labour strikes on the share returns of the JSE Top 40 Companies 161 mendations/Introduction_to_the_Event_Study_Methodology%5B1%5D.pdf Date of access: 17 Sept. 2017.






Financial Economics