*This is a revised version of a paper presented at the Western Economic Association International 69th Annual Conference, San Diego, Calif., July 8, 1995 in a session entitled “International Securities Prices and Investment.” The author appreciates the valuable comments provided by the session discussant and audience, as well as by two anonymous reviewers. The paper discusses a portion of the results in the author's dissertation research at U.C. Riverside, and thus additional thanks are due to R. Robert Russell, Robert A. Haugen, Herb Johnson, Keith Knapp, Brian Archibald, James Berens and Patricia Watters.
DISINVESTMENT FROM SOUTH AFRICA: THEY DID WELL BY DOING GOOD
Version of Record online: 29 JUN 2007
Contemporary Economic Policy
Volume 15, Issue 1, pages 76–86, January 1997
How to Cite
POSNIKOFF, J. F. (1997), DISINVESTMENT FROM SOUTH AFRICA: THEY DID WELL BY DOING GOOD. Contemporary Economic Policy, 15: 76–86. doi: 10.1111/j.1465-7287.1997.tb00456.x
- Issue online: 29 JUN 2007
- Version of Record online: 29 JUN 2007
This paper uses standard event-study methodology to analyze the effect of announcing disinvestment or withdrawal of U.S. firms from South Africa during the 1980s on those firms' returns. Several different measures of abnormal return indicate a consistent and significant positive announcement effect, particularly for the two- and three-day periods surrounding the public announcement. With one exception, these results hold even when the variables are normalized by their respective standard deviations to account for possible changes in variance due to the announcement. Using the “ordinary cross-sectional” test statistic rather than the usual t-statistic explicitly accounts for a change in variance at announcement throughout the analysis.