3. Electronic Theses and Dissertations (ETDs) - All submissions

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Subject: search.filters.subject.Corporate governance

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    Investigation of dividend policy, corporate governance and agency costs on the Johannesburg stock exchange
    (2018) Qopana, Nts'eliseng
    Dividend policy has been an issue of much financial, economic and literature analysis for many years, and remains one of the most debated topics in the field of corporate finance to date. This study attempts to investigate the impact of dividend payments on the agency costs of companies listed on the Johannesburg Stock Exchange. It further explores the role of ownership structure and corporate governance in mitigating agency costs in such publicly listed firms. The study uses a sample of 179 firms during the period 2005-2016, collected from Inet BFA and company websites. The regression explores the different market conditions, that is, during the 2008-2009 global financial crisis and outside of the financial crisis. Three agency cost proxies are used, namely; Asset Turnover Ratio, Free Cash Flow and Sales & Management Expense Ratio. The explanatory variables for ownership structure are the largest shareholder and institutional ownership and corporate governance mechanisms and are measured by board composition, board size, and director remuneration. Dividends are found to be significant in reducing agency costs when both Free Cash Flow and Sales & Management Expense Ratio measures are used. A positive but non-significant relationship is observed between dividends and the Asset Turnover Ratio. Institutional ownership is found to be significantly related to lower agency costs under only two agency cost measures: Asset Turnover Ratio and Free Cash Flow. In analysing the impact of corporate governance mechanisms on their efficacy in mitigating agency costs, only director remuneration is found to mitigate agency costs when regressed on the Asset Turnover Ratio. When dividends are used in conjunction with corporate governance mechanisms, dividends then tend to mitigate agency costs across all the different proxies used.
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    The effect of separating ownership from control on leverage in Sub-Saharan African listed firms
    (2018) Tembo, Samantha Tabeth
    Context: This study seeks to examine the effect of separating ownership from control (SOC) on firm leverage in Sub-Saharan Africa, particularly, Kenya, Nigeria and South Africa. Research shows that the SOC or control-ownership wedge ratio (i.e. the deviation between control rights and cash-flow rights) positively affects firm leverage. One of the reasons given for this positive effect is that the large controlling shareholders use the high levels of debt to expropriate the wealth of the minority shareholders, to satisfy their private benefits. Owing to the misalignment of interests between the large and minority shareholders, research documents that the minority shareholders elect a board of directors that exerts pressure on managers to reduce debt financing, thus, satisfying the interests of all the shareholders. Nonetheless, no research has been done to evaluate the effect of SOC on capital structure, in Africa. Methods: The study uses the sampled firms’ financial statements as well as the I-Net Iress database, to collect the relevant data. The sample period runs from 2006 to 2017. The study challenges three hypotheses. The first hypothesis is that there is the incidence of the SOC in Sub-Saharan Africa. The second hypothesis is that the SOC or control ownership wedge ratio (CW) has a positive effect on firm leverage, in Sub-Saharan African firms. The third hypothesis is that a large board (in widely held firms) positively affects firm leverage. Panel data regressions are used to examine the effect of the SOC on firm leverage. The Arellano and Bond (1991) Generalised Method of Moments (GMM) procedure is used to perform the robustness checks. Findings: The descriptive results document evidence that there is the incidence of the SOC in Sub-Saharan firms. Most importantly, the results document a statistically significant and positive relationship between the CW and firm leverage. Finally, the results designate that there is a negative association between a large board size and firm leverage. Conclusions: These results suggest that owing to the SOC, the large controlling shareholders exert pressure on a firm’s subsidiaries to issue high levels of debt, to avoid the dilution of ownership and control as well as expropriate the wealth of the minority shareholders (through private benefits). A large board has a negative significant impact on firm leverage, in dispersed Sub-Saharan firms, indicating that large boards (in widely Sub-Saharan firms) serve their purpose of protecting minority shareholders’ interests using capital structur
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    Strategic environmental risk management in South African companies
    (2018) Kitsikopoulos, Claudia
    ABSTRACT Past and current corporate sustainability management approaches to natural resource use have been characterised by a short-term financial focus, while natural systems have been viewed as stable, linear and predictable. This approach disregards the multidimensional characteristics of social-ecological systems, of which humanity forms an integral part. Such systems are dynamic, complex and non-linear in space and time and can change in unpredictable ways. Human activities have led to a significant increase in the pressure on ecosystem services, resulting in severe degradation of most ecosystems and causing the global ecological system to become increasingly unstable and unpredictable and weakening the planet’s ecological resilience. To account for these dynamics, the sustainability concept has evolved from conceptualising the Triple Bottom Line (TBL) model, still giving preference to the financial aspects of business conduct, to applying risk and resilience theory. To manage natural resources more sustainably, reduce risk exposure resulting from natural resource degradation and ensure sustained human wellbeing, more strategic approaches are required by integrating environmental risks into corporate sustainability management practices to establish whether these are aligned with risk and resilience thinking as part of sustainable development. It will also identify whether businesses are starting to reconsider their position as part of a complex social-ecological system, and not as separate entities disconnected from it. A reassessment of corporate sustainability practices is necessary to enable sustainable management of natural resource use and enhance resilience during times of increasing uncertainty and unpredictability. The aim of my PhD thesis was to advance our understanding of whether businesses address social-ecological system complexity as part of their business strategy and the risks associated with ecosystem degradation to strengthen resilience. Annual, integrated and sustainability reports of 30 of the Top 100 Johannesburg Stock Exchange (JSE)-listed companies were assessed on the quality of environmental iv impact disclosures between 2008 and 2013 as well as on the extent of environmental risk reporting between 2008 and 2015. To identify whether company reports address system complexity indicating a paradigm shift in business practices, annual, integrated and sustainability reports were compared to two risk maps that were created from existing literature. Interviews with sustainability managers were conducted to identify factors affecting environmental reporting and management as well as strategic environmental risk management approaches. The environmental impact disclosure quality was found to be average to poor and environmental risks were rarely addressed. The most frequently reported environmental risk was related to water and climate change with 20-25% in 239 reports. These were connected to other sustainability and business risks or strategic objectives in only few cases. Interviews suggest that JSE listing requirements, King III and other legal obligations appeared to be a driving force in moving businesses towards sustainable practices but that reporting fatigue, as well as resource and time constraints were found to negatively affect the advancement of corporate sustainability. Further, understanding of complexity and acknowledgement of business’ dependence on natural capital and strategic management of environmental risks were rarely evident. The findings indicate that, while the sustainable development concept has shifted towards multi-level, multi-system complexity of social-ecological systems of which businesses are a part, corporate sustainability still displays a disconnection from the system as well as short-term, linear and retrospective views and management approaches. The ability to sustain economic, social and environmental wellbeing during and after the planet’s transition from a stable state to a new, unpredictable one is thus compromised. Some companies were found to practice strategic environmental risk management, thus creating a resilient business and providing long-term value to all parties involved and affected by their business operations. A number of recommendations are made that could advance corporate sustainability.
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    Challenges faced by construction companies in Gauteng in implementing the revised BEE codes
    (2017) Koaho, Tholwana
    In 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.
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    The role of the internal audit function (IAF) in integrated reporting and possible challenges and barriers to internal audit’s involvement
    (2017) Engelbrecht, Lindie
    The purpose of this research is to explore the roles of the internal audit function (IAF) in integrated reporting and identify the possible challenges and barriers to internal audit’s involvement. The research was conducted to fulfill three main purposes: to determine if the IAF has any role to play in integrated reporting; to identify the potential challenges and barriers of internal audit’s involvement; and to identify and recommend best practices for internal audit’s involvement. The potential roles of the IAF in integrated reporting is predicted through current practices and literature. The research approach required an understanding and contextualisation of current practices by interviewing Chief Audit Executives (CAEs), following a qualitative approach within an interpretivist paradigm. The results were analysed using a data analysis spiral.The main conclusion drawn was that the involvement of the IAF in integrated reporting is closely linked to the maturity of the integrated reporting process. The research sample consisted of CAEs of listed companies that are recognised as producing good integrated reports and whose integrated reporting processes are in varying stages of maturity. The practical implications for CAEs are to apply best practices in becoming involved in the integrated reporting process and to avoid potential challenges and barriers. The role of the IAF in integrated reporting has not yet been identified through prior studies and this can be considered as the most significant contribution of this study. Key words – Assurance, Integrated reporting, Internal audit
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    Questions on using control self assessment techniques on information systems development projects
    (1998) Erasmus, A J
    Corporate Governance requires management to report to its stakeholders on Internal Control Systems. Corporate Governance is the system through which organisations are directed and controlled. To meet these requirements management needs a mechanism through which they can stay abreast of such control systems. The aim of this research is to evaluate whether such a mechanism can be provided for Information System Development (ISD) projects, through Control Self-Assessment questionnaire and / or workshop techniques. [Abbreviated abstract. Open document to view full version}
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    An understanding of materiality in an integrated reporting context: an application of logics
    (2015) Cerbone, Dannielle
    This study is concerned with the adoption of materiality as a key reporting principle in the integrated report. This study investigates how preparers are determining which information is material and ought to be included in their integrated reports. The influence of logics is observed through an investigation of the different conceptualisations of the materiality concept by the preparers of integrated reports. Qualitative data was gathered from interviews with preparers of integrated reports in South Africa. The data was analysed using a grounded theory approach and the interplay between old and new logics that are shaping materiality in integrated reporting was identified. The findings of this research indicate that there are three groups of preparers each embodying different logics. The compliance preparers view integrated reporting as a compliance exercise. The stakeholder-aware preparers are aware that the integrated report should communicate with a wide variety of stakeholders and the interpretive preparer uses the integrated report not only to communicate to stakeholders but to identify weaknesses with in the entity. The findings also indicate that there are variations in practices and understandings of materiality and reveal differing organisational priorities which highlight the extent to which materiality is a social and behavioural phenomenon. The research adds to the limited body of corporate governance research drawing on an interpretive epistemology to explore recent reporting developments in a South African context the findings of this study will be relevant for the current debate about materiality in the integrated report, especially given the emergence of integrated corporate report. Keywords: King 3, GRI, Sustainable reporting, South Africa, Materiality, Institutional Logics, Integrated report.
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    Stakeholder models, sustainability and the ethics of planned obsolescence
    (2016) Matisonn, Joanne Rona
    In this research report I will be investigating whether companies have an obligation to shareholders or a wider group of stakeholders. If they have an obligation to a wider group of stakeholders, then the question is whether planned obsolescence is an ethical practice that should inform their business and what the role is of ethical leaders in addressing problems such as job losses, environmental damage and conspicuous consumption that result from planned obsolescence. As part of my attempt to answer the research question I will discuss the evolution of views regarding business and the profit motive in relation to shareholders, the multi-fiduciary model, the enlightened shareholder approach and the inclusive stakeholder approach. I will then focus on planned obsolescence as a pervasive business practice and what circumstances morally justify negative consequences which are weighed against the positive effects. Finally, I will propose ethical solutions to the issues raised around planned obsolescence, aimed at achieving specific benefits whilst also limiting the negativity introduced by planned obsolescence.
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    A comparative study on strategy disclosure between emerging markets and developed markets
    (2016) Phala, Morungwa Lumka
    The focus of this study is to provide a view of the extent of strategy disclosures made by companies in both the developed market and the emerging market. The study also provides empirical evidence on the differences in the extent of strategy disclosures between developed and emerging markets. From the results of the study, it can be concluded that the emerging market companies have better strategy disclosures in their annual reports than companies in the developed market. [Abbreviated abstract. Open document to view full version]
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    Trends in integrated reporting by JSE listed companies: an analysis of the integration of financial performance with corporate governance disclosures and economic, social and environmental sustainability reporting
    (2015) Mashile, Nkabaneng Tebogo
    With changes in international governance trends leaning towards integrated reporting, and the inclusion of good governance practices in the Companies Act No. 71 of 2008, it has become imperative for companies to embrace integrated reporting in order to be, and also be seen to be, responsible with regard to social, environmental and economic issues. The purpose of this report is to investigate the trends in the extent of integrated reporting by companies listed on the Johannesburg Stock Exchange (JSE). The report sought to investigate compliance with the recommendations of the King Report and Code of Governance Principles for South Africa 2009 (King III) by companies listed on the JSE. The report assesses the extent of reporting and disclosures made by companies in relation to the specific recommendations contained in the various chapters of King III since the inclusion of King III in the JSE listing requirements for financial years beginning on or after 1 March 2010. The report also assesses the extent of economic, social and environmental sustainability reporting as required by the Global Reporting Initiative (GRI) guidelines. The annual integrated reports of fifty-two companies listed under the various sectors of the JSE were examined to determine whether there had been significant changes in the specific disclosures provided by these companies, as recommended by King III, from 2010 to 2012. The key findings of the study show that although there has been an increase in the level of disclosure by companies, this change was not significant over the three-year period. The results also show that much improvement is needed in disclosures relating specifically to the new King III sections of risk management, compliance management and IT governance. Key words: corporate governance, disclosure, financial performance, integrated reporting, non-financial information, sustainability
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