alexa The Impact of the Indigenous Economic Empowerment Act o
ISSN: 2151-6219

Business and Economics Journal
Open Access

OMICS International organises 3000+ Global Conferenceseries Events every year across USA, Europe & Asia with support from 1000 more scientific Societies and Publishes 700+ Open Access Journals which contains over 50000 eminent personalities, reputed scientists as editorial board members.

Open Access Journals gaining more Readers and Citations

700 Journals and 15,000,000 Readers Each Journal is getting 25,000+ Readers

This Readership is 10 times more when compared to other Subscription Journals (Source: Google Analytics)

Research Article

The Impact of the Indigenous Economic Empowerment Act of Zimbabwe on the Financial Performance of Listed Securities

Prosper Munyedza*

Department of Banking and Finance, Bindura University of Science Education, Post Bag 1020, Bindura, Zimbabwe.

*Corresponding Author:
Prosper Munyedza
Department of Banking and Finance
Bindura University of Science Education
Post Bag 1020, Bindura, Zimbabwe
E-mail: [email protected]

Accepted date: May 27, 2011; Published date: August 30, 2011



This study examines the daily closing price performance of ZSE listed securities post enactment and subsequent adoption of the Indigenous Economic Empowerment Act by the Government of Zimbabwe. A desk analysis of the closing daily trading prices of the largest counters, by market capitalization, traded on the stock exchange for the period January to April 2010 is made. Interview and questionnaire responses from day traders show a high negative correlation between the promulgation of the Act and the daily trading prices of all counters traded on the ZSE. First difference tests on the counters’ price movements yielded strong correlation coefficients which seem to suggest Granger causality between the share price movements and the passing of the Act. Further findings reveal that closing prices of all the largest counters traded on the ZSE were adversely affected by the Act. As a rule, empowerment laws should not significantly and adversely affect trading prices. However, historical backgrounds seem to suggest evidence of rampant systemic inefficiencies resulting from previous empowerment policies implemented in Zimbabwe. This background seems to have induced investment phobia and apprehension among investors. This fear appears to have scared away investors, initially from trading in counters whose ownership structures are likely to be affected by empowerment policies, and ultimately all the other counters. This behaviour affects the daily closing prices of listed securities. However, empowerment laws were found to have the potential to facilitate a prompt escalation of previously underprivileged economic agents onto lucrative industries and markets. One conclusion drawn is that, if properly instituted, empowerment policies could lead to the introduction of new and vibrant entities onto bourses. The introduced entities could have the potential to achieve sustainable profit levels hence sustainable economic development for a country.


Share This Page

Additional Info

Loading Please wait..
Peer Reviewed Journals
Make the best use of Scientific Research and information from our 700 + peer reviewed, Open Access Journals
International Conferences 2017-18
Meet Inspiring Speakers and Experts at our 3000+ Global Annual Meetings

Contact Us

© 2008-2017 OMICS International - Open Access Publisher. Best viewed in Mozilla Firefox | Google Chrome | Above IE 7.0 version