3. Electronic Theses and Dissertations (ETDs) - All submissions
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Item Challenges faced by construction companies in Gauteng in implementing the revised BEE codes(2017) Koaho, TholwanaIn October 2013, the Department of Trade and Industry (DTI) revised the 2009 construction codes. From the revision, Black Economic Empowerment (BEE) is now measured using five (5) elements instead of seven (7), as was the case with the previous BEE codes. KPMG states that on average, construction companies will drop 2 BEE levels as a result of the revised BEE codes. This study is aimed to examine how Grade 9 Construction Industry Development Board (CIDB) rated construction companies with registered offices in Gauteng implement the revised BEE codes1, and the challenges which they face in implementing the revised BEE codes. The study followed a qualitative research methodology approach, semi structured interview were used to collect the necessary data from the various companies. Individuals responsible for implementing BEE from Grade 9 CIDB rated construction companies in Gauteng were interviewed. Of the 21 companies which were interviewed, companies implemented BEE by increasing in spent on enterprise and supplier development and skills development. The biggest challenges that the companies faced was increasing/introducing black ownership within the company and employing previously disadvantaged individuals into management positions. The results of the research would guide the CIDB in drafting further revisions of the BEE codes as to curb construction companies from dropping their BEE levels due to BEE legislation.Item Financial analysis of the South African life insurance sector: an empirical decomposition of Economic Value Added(2015) Mangenge, TakalaniThe main purpose of the study is to determine which value drivers of economic value added (EVA) are most important. That is, what are the main determinants of the overall company value? The three main questions raised in the study are: (1) How sensitive is total EVA to changes in each of the various value drivers? (2) Which of the value drivers are more important in managing economic value? (3) Is there a combination of these value drivers that best explain EVA as a group? The study, which adopts the Stewart (1991) definition of EVA, covers the life insurance sector in South Africa, specifically focusing on the following companies: Discovery Holdings, Liberty Holdings, MMI Holdings, Old Mutual plc, and Sanlam Ltd. It covers the period 2004-2014 and uses variance analysis and principal component analysis to identify the main drivers of EVA. Five main drivers of EVA were identified namely; underwriting, asset management, costs, opportunity cost and strategic investments.Item The measurement of post-acquisition performance in RSA using economic value added (EVA)(2014-01-02) Makhele, Amos TlaliThis study re-examines post-acquisition performance of acquiring firms in South Africa using Economic Value Add (EVA). Investigation of the 336 acquisitions occurring during 2000 to 2011 reveals that acquiring firms experience significantly deteriorating EVA after the completion of acquisitions. Further, this study evaluates the performance of other traditional accounting measures including Earning per share (EPS), Return on capital (ROC), Return of Assets (ROA) and Return on Equity (ROE) post acquisition. The results suggest that acquiring firms tend to experience slightly improved performance after completion of the acquisitions when using traditional accounting measures. But the improved operating performance is wiped out by capital costs of the large premiums paid to the target firm, creating no real economic gains to the acquiring firm‘s shareholdersItem Impact of working capital on the profitability of South African firms listed on the Johannesburg Stock Exchange(2013-02-20) Ncube, MkhululiThis study examines the influence of working capital management components on the profitability of South African firms listed on the Johannesburg Stock Exchange (“JSE”). In addition, the study investigates how the influence of the selected working capital management components changes as macroeconomic conditions change. The study used accounting based secondary data obtained from I-Net Bridge and BF McGregor for 254 firms from 2004 to 2010. The Pooled Ordinary Least Squares (“OLS”) regression models were used in the analyses. The key findings from the study indicate the following: (1) that there exists a significant negative relationship between the net time interval between actual cash expenditures on a firm‟s purchase of productive resources and the ultimate recovery of cash receipts from product sales (cash conversion cycle) and profitability. This negative relationship suggests that managers can create value for the shareholders of the firm by reducing the cash conversion cycle; (2) that there exists a significant negative relationship between days sales in receivables and profitability. This indicates that slow collection of accounts receivables is associated with low profitability and suggests that corporate managers can improve profitability by reducing credit period granted to their customers; (3) that an increase in the length of a firm‟s cash (operating) cycle tends to increase profitability during an economic recession than during an economic boom. This result indicates that firms adopt a more generous trade credit policy during an economic recession than during a boom in an attempt to boost sales which would ordinarily dwindle during a recession. The implication of this positive relationship in comparison with a negative relationship between the normal cash conversion cycle and profitability is that corporate managers need to streamline their trade credit policy and change it accordingly as the macroeconomic environment changes in ensuring that the company‟s sales are not adversely impacted as economic conditions change. Furthermore, the study finds that there exists a highly significant negative relationship between profitability and the following respective ratios: days payables outstanding, current ratio, and capital structure. The negative relationship found between profitability and debt to equity ratio (used as a proxy for capital structure) indicates that South African firms‟ profitability tends to decrease at excessively high and increasing levels of debt.Item Capital and debt maturity structures of a firm: evidence from selected African countries(2012-07-04) Lemma, Tesfaye TaddeseThe thesis examines the influence of institutional, macroeconomic, industry and firm characteristics on financing decisions of firms in nine select countries in Africa. It develops a battery of econometric models and examines 10 year (1999-2008) data pertaining to 986 non-financial firms and sample countries using various estimation procedures. The results suggest that financing decisions of firms in Africa is not only determined by firm characteristics (such as firm size and profitability, growth opportunities, asset tangibility and/or maturity, earnings volatility, dividend payout and non-debt-related tax-shield) but also by industry, macroeconomic (income group of the country, size of the overall economy and its growth, inflation and taxation) and institutional (legal origin, investor rights protection and law enforcement) factors. The research also demonstrates that firms in Africa face adjustment costs and/or benefits in rebalancing their capital and debt maturity structures to the optimal and such costs depend on select firm, industry, macroeconomic and institutional factors. Our findings signify that firms in Africa are concerned about transaction, agency and bankruptcy costs; information asymmetry and adverse selection problems; financial flexibility and access to finance issues; tax regimes, investor rights protection and law enforceability, among others in making their financing decisions. It is strongly recommended that governments, policy makers, and other stakeholders should pull their efforts together to come up with legislations, policies and directives that enhance investor rights protection and law enforcement which will in turn boost the confidence of market participants. The study also recommends that governments should use interest rate restraints and reserve and liquidity requirements to enhance financial deepening which will in turn enhance investors’ confidence.Item The effect of macroeconomic conditions on the capital structure adjustment speed of South African listed firms(2012-06-29) Krishna, SudhaThis paper uses a two-stage, dynamic partial adjustment model which accounts for potential mean-reversion, with the Arellano-Bover GMM estimation technique, to observe the effect of various macroeconomic variables on the speed at which South African listed firms adjust toward their target capital structures. Employing two definitions of financial constraints, these effects were also compared for financially constrained and unconstrained subsamples. Using a sample of listed firms spanning from 2000 to 2010, the findings of the study show some indication that firms adjust faster in unfavourable macroeconomic states relative to favourable states. There is also evidence to suggest that the adjustment dynamics of unconstrained firms differ from that of constrained firms. In addition, higher adjustment speeds are generally observed when using short-term debt relative to other debt definitions. However, the evidence is largely inconclusive as adjustment speed estimates are highly sensitive to the definition of financial constraints used, and to the inclusion of extreme leverage observations.Item Perception on the quality of South African annual reports(2012-06-29) Dimi, OlandzoboCannot copy abstractItem Corporate payout in South Africa: have share repurchases replaced cash dividends?(2012-01-18) Ramorwa, Botsang PhomoloA generous amount of research on payout policies has reported that the trends of payout policies have changed overtime. The common pattern in most of these studies is that fifty years ago cash dividend was the most dominant and favourable form of payout, but this pattern was not maintained and saw some changes in the 1980s. The 1980s was a period where the use of repurchases increased significantly in both the US and the UK and this increment was paired with a declining propensity to pay dividends. It is this observation that impelled researchers to suggest that share repurchases were substitutes for cash dividends as they were being finance with reductions in cash dividends. Share repurchases are a new concept in South Africa compared to other international capital markets. The implementation of the Companies Amendment Act 37 of 1999 has made it possible for companies to carry out open market stock repurchase programmes in South Africa and since then, share repurchases have become an intricate part of payout policy for South African firms. This study tests whether indeed the declining propensity to pay dividends and the increasing propensity to repurchase patternsare observable in South Africa and whether share repurchases are indeed substitutes for cash dividends in today’s markets. This study examines the payout policies of 116 companies listed on the Johannesburg Stock Exchange (JSE henceforth) between 2002 and 2009. Overall, this study finds that the use of share repurchases has increased substantially in South Africa during the sample period. Dividends have also increased significantly and the total payout ratio exhibited an upward trend between 2002 and 2009. This implies that the increase in repurchase activity was not financed by the decrease in dividends, as dividends had also followed an upward trend. There is sufficient evidence that repurchases and dividends are certainly not substitutes in South Africa.In addition to the observation thatdividend and repurchase payout ratios moved in the same direction for most parts of the sample period, a iii positive relationship between the dividend forecasting error and repurchase activity was realized, thus, dividends and repurchases weredeclared complements.Item Legal aspects of corporate governance in the republic of South Africa: towards a possible model for improved stakeholder relations within the corporation(2007-02-13T13:07:13Z) Spisto, Michael PaoloTraditionally, company law assumes that the directors’ role is to run the company for the benefit of its shareholders alone and to maximise profits for them. It can be argued, however, that this view is too narrow and outdated; that is, company directors should have regard to the rights and interests of a broader range of corporate stakeholders. Hence, the question is whether we should change our perception of the company or corporation from one run by directors dedicated exclusively to serving the interests of shareholders to that of a corporation whose main purpose is to bring benefit not only to its owners and creditors, but also to its employees, the community and the environment. Given that reforms of directors’ duties in light of the above considerations have found their way into legislation across the globe, this thesis examines how and to what extent legal rules and policies should develop in South Africa to place directors under a positive duty to take account of the interests of bodies other than shareholders. Current South African company law does not contain clear rules regarding corporate governance issues and the duties and liabilities of directors. These matters have been left to the common law and Codes of Corporate Practice. Thus, there is no extensive statutory scheme in South Africa, which covers the duties, obligations and accountability of directors. The focus in this thesis is on the rights and interests of employees and the premise that is defended is that it is valuable to corporations to provide employees with an institutionalised voice at board level. It is argued that there is global evidence that where employees participate in the decision-making processes of the company, performance is generally enhanced. This, in turn, directly impacts upon and improves economic productivity, generating a ‘win-win’ situation. The question of the duties of company directors and managers is attracting much attention in South Africa. With rapidly developing and changing labour legislation in South Africa, it is essential to consider the extent to which the country should reassess its traditional principles of company law and corporate governance policies in order to encourage participatory roles for employees in the workplace. It is argued that if South Africa is to improve corporate productivity levels with its re-entry into international markets, management and labour must find improved ways of dealing with one another. The main purpose of this thesis, therefore, is to propose and formulate a workable corporate governance model for South Africa – one that would be advantageous to all stakeholders, especially the employees. This is achieved by comparing and contrasting international models of corporate governance and by applying the best features of each to the unique South African corporate system of values, structures and traditions. It is suggested that the current unitary board structure operating in South Africa has become outdated and does not provide employees with rights enabling them to engage in the decision-making processes of the corporation with their employees at an adequate level. In its place, a two-tier board system of corporate governance is proposed. The economic success of a company will bring about social benefits to many stakeholder constituencies. This will not happen if the company is a financial failure. The issue of obliging directors to act primarily for the benefit of shareholders alone is questioned. Corporate governance reforms were undertaken in many parts of the world in the late 1980’s and early 1990’s. This reform process questioned whether the interests of the company should be managed for the shareholders alone or for the other corporate stakeholders as well. There are many views that strongly support the idea that corporate governance should be seen as a system by which corporations are to be governed for the benefits of all stakeholders, including shareholders, employees, creditors, suppliers and the community. In this way, companies should be run as communities in partnerships with all their stakeholders. Thus, this thesis proposes that the success of a company is inextricably intertwined with a consideration of the rights and interests of its employees and other stakeholders.