The impact of the selected macroeconomic indicators’ volatility on the performance of South African JSE-listed companies: a pre-and post- Covid-19 study

Abstract

The influence of macroeconomic variables on aspects of business and the country's economy has been a subject of robust discussion. This study was conducted to identify the effect of macroeconomic variables, namely inflation rate, economic growth, exchange rate and share price, on listed companies in South Africa. The goal was to study the long run and short run effects of macroeconomic volatility on company performance because of the world’s recent pandemic experience. To achieve this objective, the study applied the panel Autoregressive Distributed Lag (ARDL) model on annual panel data from 2010 to 2020 to analyse the short run and long run effects of macroeconomic variables on a company’s performance. The study results suggested a positive impact of economic growth, exchange rate and share price on asset returns, whilst a company's equity return is supported by economic growth and share price in the long run. The short run revealed that none of the independent variables has a sufficiently significant effect to influence a company's performance changes in the short run. Based on the findings, it was recommended that policymakers and economic authorities should introduce and implement strategies that favour and enhance the country's economic growth and stable exchange rate in order to improve company performance. Additionally, given that the company's short-run performance may highly depend on internal factors such as corporate governance, internal policies and business strategies, these decisions should be taken with precaution and a high level of professionalism.

Critical Indicators on Macro Economics adoption in GDP: A systematic review

“…But when [30] used the autoregressivedistributed lag, their results showed that, while exchange rates are not statistically significant, their coefficients indicate a negative relationship with the manufacturing sector. The autoregressive distributed lag (ARDL) model and yearly panel data from 2010 to 2020 are used by [59] to analyze the South African economy. The study's conclusions show that economic growth and exchange rates have a beneficial long-term impact.…”

“…That being said, the whole economic output will be examined in this study. In their analysis of the South African economy, According to [59] analysis of the South African economy, there was no discernible influence of inflation or economic growth on a company's performance changes in…”