African Journals Online
African Finance Journal

Volume 3, Part 1 2001
ABSTRACTS

PRIVATE INVESTMENT, UNCERTAINTY, AND IRREVERSIBILITY IN UGANDA

Alexander Bilson Darku
Economics Department
McGill University
Canada

The paper uses panel data on Ugandan firms and a measure of idiosyncratic uncertainty to determine the nature of investment sensitivity to changes in perceived uncertainty among firms with different degrees of investment reversibility. 

Using a sample selection technique to fit a modified version of an accelerator model, the paper yielded results consistent with predictions of theories of irreversible investment. The results indicate a negative relationship between uncertainty and investment. Findings also indicate that uncertainty has a greater negative effect on investment for firms with less reversible investment.



A NOTE ON FINANCIAL RISK MANAGEMENT IN AUSTRALIAN COMPANIES

Bruce Rossner and Jean Canil
The University of Adelaide
Australia

The evolving literature and evidence on corporate risk management is briefly reviewed. The evidence lags the theory, which focuses on two factors: operating and financial risks driving the probability of financial distress, and managerial incentives. Using Australian company data, this study reports evidence that the extent of overall hedging is positively related to both operating and financial risks, and is also influenced by fund ownership. Managerial incentives appear to be of little importance. 



DEVELOPMENT OF THE CAPITAL MARKET IN BOTSWANA

NS Bonu
Faculty of Business
University of Botswana
and
TTK Matome
Former Lecturer in Faculty of Business
University of Botswana

During its early days the capital market in Botswana was inadequate with respect to providing the required long-term developmental finance. It was for this reason that the Government of Botswana took an active role in long-term lending to the parastatals via external borrowings.

Meanwhile, the government, on seeing the need to set up a market where organisers could raise the development finance, set the ball rolling in the direction of the establishment of a market for shares.

In this paper, we bring out government's realisation of the need for a capital market, and the path that was followed in the development of such a market. Finally, we address the possible reasons for the tardy growth posted by this market, and identify several ways of stimulating the market growth.



CONSTRUCTION OF ALL SADC STOCK MARKETS INDICES

Luvo Tyandela and Nicholas Biekpe
Africa Centre for Investment Analysis
Graduate School of Business
University of Stellenbosch
South Africa

This paper presents a brief study on the construction of the Southern African Development Community (SADC) All Stock Market Indices, namely the SADIX (SADC Stock Market Index including South Africa) and the SADEX (SADC Index excluding South Africa), which will serve as performance benchmarks for the region, and as indices for tracking the stock markets performance in the region. The exchanges are from Botswana, Malawi, Mauritius, Namibia, South Africa, Swaziland, Zambia and Zimbabwe. The study also conducts a brief comparative analysis of the SADC bourses' with respect to returns generated by individual stock markets over a period of time, and performs a correlation analysis between the indices of the eight SADC countries.