The impact of firm size and liquidity on the cost of external finance in Africa

Hearn, Bruce and Piesse, Jenifer (2015) The impact of firm size and liquidity on the cost of external finance in Africa. South African Journal of Economics, 83 (1). pp. 1-22. ISSN 0038-2280

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Abstract

Established illiquidity measures are constructed for emerging markets in Africa and used to determine which best explains trading costs. Costs of equity are derived from an augmented Capital Asset Pricing Model for a sample of emerging financial markets generally ignored in the literature. These include: South Africa and Namibia, three countries in North Africa and four in Sub-Saharan Africa (SSA), plus London and Paris as examples of integrated markets. Minimum variance portfolios are constructed and asset weights derived, with the sample divided into countries dependent on their legal regime. Portfolio weights are shown to be directly related to well-regulated markets with high standards of corporate governance and disclosure, and firms seeking cost-effective finance from SSA stock markets are at a distinct disadvantage compared with those in Northern Africa, South Africa and, in particular, London and Paris.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Business and Management
Subjects: H Social Sciences
Depositing User: Tahir Beydola
Date Deposited: 04 Dec 2015 09:20
Last Modified: 07 Mar 2017 05:58
URI: http://sro.sussex.ac.uk/id/eprint/58645

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