The role of the JSE ALTX as a platform for sustainability and growth for high growth potential SMEs
Year: 2021
Type: dissertation
Abstract: Stock exchanges are organised marketplaces, licensed by a relevant regulatory body, where ownership shares in companies are listed and traded. They are continuous trading platforms, which could improve the sustainability, growth and liquidity of companies. The JSE AltX is marketed as a funding platform for high growth potential SMEs that provides an opportunity for SMEs to raise capital and grow. However, much of the existing literature on Small and Medium-sized Enterprises (SME) either focuses on survivalist businesses and when research on stock exchanges is conducted; it often focuses on larger companies. This research analysed the role of the JSE AltX as a platform for growth and sustainability for delisted, listed and migrated companies for the period 2008 to 2018. To fulfil the objectives of the study, a quantitative research design approach was followed. Nineteen ratios that measure sustainability and growth were calculated for 38 listed, 55 delisted and 37 migrated JSE AltX companies. \nMost hypotheses that tested sustainability and growth for listed, delisted and migrated companies were rejected. Listed and migrated companies showed a statistically significant relationship with market capitalisation, while for delisted companies, the market capitalisation hypothesis was rejected. There was a statistically significant relationship with return on capital and return on assets for delisted companies. The results indicated that while all the sustainability ratios for delisted companies were rejected, there was a statistically significant relationship with the profitability ratios. A new empirically tested framework was proposed that shows that while sustainability no longer plays a role in migrated companies, it still plays a role in JSE AltX-listed companies and JSE AltX-delisted companies. Sustainability is driven by liquidity in JSE AltX-listed companies, while in JSE AltX-delisted companies it is driven by profitability. The role of the JSE AltX in sustainability and growth should not be considered a one-size-fits-all approach for companies. The findings of the study suggest that the stock exchange is not a robust platform for achieving sustainability and growth for these high growth potential SMEs. \nThis research contributes to the understanding of the role of the JSE AltX in the growth and sustainability of high growth potential SMEs. High growth potential SMEs should determine realistically what is possible to achieve from participating on a stock exchange intented for SMEs. The results of this study may be useful in providing insights for companies, the JSE, investors, policymakers and academics on stock exchanges intended for SMEs.
Author: Nthabeleng Mmako
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3200267001