School of Accountancy (ETDs)

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Browsing School of Accountancy (ETDs) by Keyword "Activity-based costing"

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    The effects of the individual BEE scorecard elements on the performance of JSE-listed firms in South Africa
    (2019-02-27) Lilian, Abraham
    Black Economic Empowerment (BEE) legislation was introduced in South Africa to combat the significant modern-day racial inequality caused by Apartheid. While social returns are the primary objective of BEE, one must assess whether compliance with this legislation has also yielded financial returns. Prior studies have mainly focused on the effect of the composite BEE Scorecard on performance, and have produced inconclusive and conflicting results. This study therefore aims to gain further insight into the impact of the BEE scorecard by isolating the influence of each element of the BEE scorecard on performance. A quantitative study was undertaken using Johannesburg Stock Exchange-listed firms as the population. A multivariate panel regression analysis was performed using return on assets (ROA), return on equity (ROE) and share returns (SHR) as proxies for performance over the period 2011 to 2017. The final sample translated into 346 company-year observations for the ROA and ROE models, and 381 for the SHR model. Initial analyses evidenced a strong positive correlation between ROA/ROE and Employment Equity. The regression analyses, which controlled for profitability, growth, asset utilisation, debt, size, industry and macro-economic factors, returned two significant findings. The Ownership element of the scorecard was positively associated with both ROA and ROE, while Socio-Economic Development was negatively associated with ROA. The findings from this study add to the body of BEE research that shareholders, managers and policy-makers can consider when making decisions about BEE policies. Ongoing research to further develop these findings will assist companies in supporting the movement for economic unity while maximising their own value creation.