The Effect of Covid-19 on the Performance of the JSE-TOP40 Listed Companies
Keywords:
Pandemic; generalized method of moments; covid-19; stock returns; JSE-TOP40; strategies; business models.Abstract
In this article, the effect of covid-19 pandemic on the performance of TOP40-JSE listed companies is investigated using the two-step difference generalised method of moments (GMM) approach. JSE-Top40 listed companies’ data from 24 November 2020 to 29 July 2022 was used to examine the relationship. This is motivated by desire to understand how future pandemic could be managed and thus help contribute to measures that could minimise the adverse effect of the pandemic. Results showed that the Covid-19 as proxied by number of new deaths positively impacted the stock return of the selected companies. The JSE-TOP40 companies offered investors a safety net during the period of a pandemic. The results show that companies were able to change their business models and strategies to counter the effects of a pandemic.
References
Arellano, M. and Bond, S. 1991. Some Tests of Specification for Panel Data: Monter Carlo Evidence and an Application to Employment Equations, Review of Economics Studies, 58(1), p.277-297.
Ball, R. 2009. The Global Financial Crisis and the Efficient Market Hypothesis: What Have We Learned? Journal of Applied Corporate Finance, 21(4), p. 8-16.
Department of health. 2022. COVID-19 STATISTICS IN SOUTH AFRICA.
Available from:
https://sacoronavirus.co.za/2022/10/05/update-on-covid-19-wednesday-05-october-2022/
Accessed: 06 October 2022
Bao, S. R. and Lewellyn, K. B. 2017. Ownership structure and earnings management in emerging markets – An institutionalized agency perspective. International Business Review, 26(1), p. 828-838.
Breusch, T.S. and. Pagan, A. R. 1980. The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics. The Review of Economic Studies, 47(1), p. 239-253.
Free, E. W. 1995. Assessing cross-sectional correlation in panel data. Journal of Econometrics, 69(2), p.393-414.
Gyimah, A. G. Addai, B. and Asamoah, G. K. 2021. Macroeconomic determinants of mutual funds performance in Ghana. Cogent Economic & Finance, 9(1), p.1-20.
Insaidoo, M., Arthur, L. Amoako, S. and Andoh, F. K. 2021. Stock market performance and COVID-19 pandemic: evidence from a developing economy. Journal of Chinese Economics and Foreign Trade Studies, 14(1), p.60-73.
John Hopkins University. 2022. COVID-19 Dashboard by the centre for Systematic Science and Engineering (CSSE) at John Hopkins University (JHU).
Available from:
Coronavirus COVID-19 (2019-nCoV) (arcgis.com)
Accessed: 06 October 2022
Harjoto, M. A. and Rossi, F. 2019. Market reaction to the COVID-19 pandemic: evidence from emerging markets. International Journal of Emerging Markets, p.1746-8809.
Hausman, J. A. 1978. Specification test in econometrics. The econometric Society, 46(6), p. 1252-1271.
Hsu, Y. and Liao, L. 2022. Corporate governance and stock performance: The case of COVID-19 crisis. J. Account. Public Policy, 41(2022), p.1-14.
Maneenop, S. and Kotcharin, S. 2020. The impact of COVID-19 on the global airline industry: An event study approach. Journal of Air Transport Management, 89(2020), p.1-6.
Mazur, M. Dang, M. and Vega, M. 2021. COVID-19 and the march 2020 stock market crash. Evidence from S$P1500. Finance Research Letters, 38(2021), p.1-8.
Mbunge, E. 2020. Effect of COVID-19 in South Africa health system and society: An exploratory study. Diabetes & Metabolic Syndrome: Clinical Research & Review, 14(2020), p.1809-1814.
Ngavara, S. Mushunje, A. Chaminuka, P. and Zhou, L. 2022. Impact of the COVID-19 pandemic on the South African tobacco and alcohol industries: Experiences from British Tobacco and Distell Group Limited. Physics and Chemistry of the Earth, 127(2022), p.1-9.
Pesaran, M. H. 2004. General Diagnostics Tests for Cross Section Dependence in Panel. Discussion paper No. 1240, University of Cambridge, United Kingdom.
Reuter. 2022. South Africa’s oldest private airline in liquidation after it fails to get funds.
Available from:
Accessed: 20 June 2023
Salisu, A. A. Vo, X. V. and Lucey, B. 2021. Gold and US sectoral stocks during COVID-19 pandemic. Research in International Business and Finance, 57(2021), p.1-11.
South African government. 2022. Social grants – Coronavirus COVID – 19.
[Accessed: 31 October 2022]
Stiegler, N. and Bouchard, J. South Africa: Challenges and successes of the COVID-19 lockdown. Annales Medio-Psychologiques, 178(2020), p-695-698.
Wintoki, M. B. Linck, J. S. And Netter, J. M. 2012. Endogeneity and the dynamics of internal corporate governance. Journal of Financial Economics, 105(1), p. 581-606.
Zhao, Li, Liu, Zhu, Ma, and Wang. 2020. Prediction of the COVID-19 spread in African countries and implications for prevention and control: A case study in South Africa, Eqypt, Algeria, Nigeria, Senegal, and Kenya. Science of the Total Environment, 729(2020), p.1-10.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Lethabo Mosimanyane, Godfrey Marozva
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
