An Analysis of the Response to Corporate Unbundling Announcements on the Johannesburg Security Exchange

This research examines the effect of the announcement of corporate unbundling by South African corporations listed on the Johannesburg Securities Exchange. This research was carried out to update the literature and to analyze whether results confirm previous research done by Blount and Davidson (1996) or coincide with international trends, which displayed positive responses to unbundling announcements. The event study methodology was used for analyzing the market's reactions to corporate unbundling announcements. Abnormal returns were calculated using the market model approach with an event window of 10 days and an estimation window of 120 days. A sample of 27 corporations were analyzed in thisresearch during the observation period, from January 2002 to June 2011. Strong negative abnormal returns were observed as a result of the corporate unbundling announcement. This updates the literature and confirms Blount and Davidson's (1996) earlier research.