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Browsing Finance by Author "Nyangara, Melody R."

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    An empirical test of the validity of the capital asset pricing model on the Zimbabwe stock exchange.
    (International Journal of Economics and Financial Issues., 2016) Nyangara, Melody R.; Nyangara, Davis; Ndlovu, Godfrey
    We test the empirical validity of the capital asset pricing model (CAPM) on the Zimbabwe Stock Exchange (ZSE) using cross-sectional stock returns on 31 stocks listed on the ZSE between March 2009 and February 2014. We conclude that, although the explanatory power of beta tends to fall rapidly for prediction horizons >6 months, beta significantly explains average monthly stock returns on the ZSE. Tests to validate the CAPM reject its validity for the ZSE however, primarily due to liquidity and skewness anomalies. We nevertheless fail to detect any size effects. There is encouraging evidence to suggest that the CAPM performs reasonably well in predicting average monthly returns over prediction horizons of between 3 and 6 months. We recommend that investors and analysts must exercise extreme caution in applying the CAPM. Furthermore, we discourage strategies based on the existence of a size premium on the ZSE. Instead, investors may consider neglected and negatively skewed stocks, albeit over appropriate horizons. Further research on other African Stock Markets will help verify if the optimal performance range of the CAPM is indeed 3-6 months. Development of standard continental proxy market portfolios will also improve the estimation of betas and enhance results of cross-country tests of the CAPM.
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    An Essay on the Ethical and Corporate Governance Issues in the 2003/4 Zimbabwean Banking Crisis
    (OMICS Publishing Group, 2014) Nyangara, Davis; Nyangara, Melody R.; Mazviona, Batsirai Winmore
    This paper reviews the ethical and corporate governance issues that characterized the 2003/4 Zimbabwean banking crisis. There are contrasting views on the legal and moral roots of the crisis, and consequently, different analysts have come up with different assessments of the morality and professional propriety of measures adopted by the Reserve Bank of Zimbabwe (RBZ), as bank regulator, in response to the developments in the banking industry. While there is an almost universal acknowledgement among analysts that corporate governance and ethical shortcomings contributed to the crisis, there appears to be no universal theory justifying the response of the regulator. A critical review of the events surrounding the crisis, with some benefit of hindsight, points to a form of collective responsibility among bankers, regulators, and politicians. This analysis draws on deontological and teleological ethical theories to assess the resolution of the myriad of ethical dilemmas that characterized the period before and during the crisis. The analysis also relies on legal and prudential guidelines on good governance in banking institutions, in particular the Banking Act (Chapter 24:20).