Wits Business School (ETDs)

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Subject: search.filters.subject.Corporate governance

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Now showing 1 - 5 of 5
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    Effect of Corporate Governance and Institutional Quality on Firm Performance and Economic Growth in Emerging and Developed Markets: A comparative analysis
    (University of the Witwatersrand, Johannesburg, 2024) Natto, Dinah Milembe; Mokoaleli-Mokoteli, Thabang
    Purpose of the study The objective of the current study is to investigate the effects of corporate governance and institutional quality on firm performance and economic growth in emerging and developed markets. These sample countries were selected based on their significant role in their respective economic blocs and based on their unique economic and firm characteristic Research design The impact of corporate governance and institutional quality on firm performance was rigorously evaluated using the Generalized Method of Moments (GMM), while controlling for key variables such as economic growth and other relevant factors. Major findings The study found that corporate governance compliance levels have improved significantly in emerging economies over the study period, with South Africa leading the sample countries. In addition, corporate governance has a significant positive correlation with all firm performance measures in all sample countries. Furthermore, corporate governance has a long-term relationship with ROE and Tobin’s Q in emerging market countries and not in developed countries. However, weak institutions reverse the benefits of a robust corporate governance framework, especially in emerging economies where institutional quality was found to be low. Lastly, the study revealed that over the study period, corporate governance was only found to have a long-term relationship with Tobin’s Qin India. Practical implications Policymakers in emerging and developed markets, the research provides insights into which aspects of corporate governance and institutional quality are most effective in promoting firm performance and economic growth. This can guide the design and implementation of regulations and reforms. Investors can use the findings to assess the risk and potential returns in different markets based on the strength of corporate governance and institutional frameworks. Strong governance and institutions may indicate lower risk and higher stability. Social implication Improved firm performance driven by good governance and strong institutions may lead to better wages and working conditions for employees, reducing income inequality and contributing to social stability. Originality While studies on corporate governance, institutional quality, and their impacts on firm performance and economic growth exist, the originality lies in the comparative analysis between emerging and developed markets. Furthermore, the research integrates the analysis of corporate governance and institutional quality, rather than examining them in isolation.
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    The role of corporate governance on the efficiency of state- owned enterprises and the impact on entrepreneurship
    (University of the Witwatersrand, Johannesburg, 2024) Mantirisi, Lesedi; Mogotsi, K.
    State Owned Entities are established as a governance recourse by governments to promote economic growth. Corporate governance has been enforced as a measure of catching up corporate practices as well as global laws and regulations. Entrepreneurship has seen growth in recent years and thus needs to be governed by standard rules and regulations for it to be uniform. The aim of this research was to assess the role of corporate governance on the efficiency of state-owned enterprises (SOEs) and the impact on entrepreneurship in South Africa. This study contributes to the importance of instilling the guidelines of corporate governance in SOEs, while linking them to entrepreneurship. The study emanated from a wide viewpoint of envisioning state-owned enterprises as possible catalysts for economic growth as well as vehicles that can spread government’s resources and capabilities. The study bore three objectives: (1) to investigate the extent to which transparency and accountability affect the efficiency of state-owned enterprises as experienced by entrepreneurs; (2) to evaluate how values and ethics drive the efficiency of state-owned enterprises as experienced by entrepreneurs; and (3) to assess how management board, supervisory board and committees propel the efficiency of state-owned enterprises as per the entrepreneur’s point of view. A theoretical framework of corporate governance was instituted, and a conceptual framework was proposed to explore the key constructs identified. As per the proposed conceptual framework, the efficiency of SOEs was determined by three factors: transparency and accountability; values and ethics; and management board, supervisory board and committees. A total sample of 314 online participants in South Africa, of which 89% were based in Gauteng, was tested. SPSS software was utilised for the data analysis and the results indicated that the relationships between the constructs forming the conceptual framework and the efficiency of SOEs, linked to entrepreneurial activity, were insignificant. The hypotheses were tested using Spearman’s correlation values. The study included recommendations on improving the efficiency of SOEs as well as suggestions for future research
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    Corporate governance of robotic process automation by South African firms
    (2023) Nortje, Anri
    Traditional corporate governance policies and principles do not make provision for the implications of new technologies, like robotic process automation, on digital business. Without the appropriate governance of technologically-enabled advancements, firms are exposed to new threats and face increased vulnerabilities. Using constructivism, this study aimed to understand which governance principles firms in South Africa should have in place for the use of robotic process automation. The study finds that the governance of robotic process automation depends on (i) digital governance and risk management, (ii) cybersecurity and data protection, and (iii) digital business ethics considerations that firms need to address when they deploy robotic process automation software. Based on the findings and the data analysis, the study formulates a model for the governance of robotic process automation called “an expanded model for RPA governance in South African digital business”. From this model, the study concludes with seven governance principles, proposed by the researcher, to assist South African firms with the governance of robotic process automation.
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    Enterprise risk management, corporate governance, performance and risk-taking behaviour of the insurance industry: empirical evidence from Ghana and South Africa
    (2022) Horvey, Sylvester Senyo
    The growing complexities in the business environment have led to the adoption of enterprise risk management (ERM). ERM is a new approach to managing organisational risks holistically to achieve its goals. Regardless of the diversities in the business environment, ERM has become an essential factor for businesses and is believed to enhance shareholder value. Despite the growing number of studies on ERM, literature suffers some limitations regarding its proxies and inconclusive results between ERM and performance. This study adopts a more comprehensive measurement of ERM, which captures various characteristics (such asrisk governance, operational mechanisms, and quality of risk oversight) within the risk ecosystem. The study uses a panel regression technique on a sample of 33 and 63 insurers from Ghana and South Africa, respectively, covering 2015-2019. This thesis is centred on four thematic papers. Each focuses on a specific subject (s) at the heart of the problems or research questions being investigated. The first paper provides a comprehensive and systematic literature review on the measurement and performance of ERM. Google Scholar was the primary search tool for ERM literature spanning 2001 to 2020, and papers listed in SCImago journal ranking were discussed. The study finds that most studies rely on secondary sources, particularly the Chief Risk Officer’s appointment, as a simple ERM proxy. This is widely adopted in the literature due to the difficulty in assessing ERM information. The study recommends that empirical measurement of ERM rely on both primary and secondary data as they complement each other and allow more insight and factors to be considered for a robust ERM measurement. In terms of performance, the ERM literature reveals mixed findings, but enough evidence supports the assertion that ERM enhances firm profitability and value. The study suggests that scholars consider examining the ERM-performance relationship in emerging economies as most of these studies centred on the US and European economies. The second paper analyses the determinants of ERM adoption in Ghana and South Africa using a panel logistic regression technique. Building on the contingency theory, the study posits that several factors contribute to ERM adoption. The study finds that firm size, ownership, leverage, industrial diversification and the type of audit firm are positively associated with ERM adoption in both countries. Findings from the quantile regression also highlight that the initial levels of size, profitability and leverage reduce ERM adoption, and an extreme increase in these factors promotes iii ERM adoption, which implies a nonlinear direct U-shape relationship. On the contrary, the study sees an inverted U-shape for return on assets and leverage for Ghana. Industrial diversification, Big4 audit companies and ownership show consistent patterns of a significant positive effect on ERM adoption at different quantiles for both samples. The findings support the fact that insurers could improve their risk management system by considering the factors that significantly affect them. The third paper first examines the impact of ERM on insurance performance (underwriting performance and Return on Assets) and second investigates how corporate governance (CG) characteristics such as the board size, board independence, and gender diversity interact with ERM in affecting insurance performance. The major findings are summarised as follows: (1) a positive relationship exists between ERM and insurance performance for both countries; and (2) board size, board independence and gender diversity interact with ERM in affecting underwriting performance and return on assets. This was mostly positive and significant in both samples. The study suggests that insurers interested in ensuring an effective ERM system should leverage these corporate governance factors to appreciate the overall impact of ERM on performance. In the final paper, the study examines the linear and non-linear effects of ERM and CG on risktaking behaviour. The result from the linear regression elicits a significant positive relationship between ERM and risk-taking for both countries, implying that insurers with a strong ERM system are more likely to pursue higher risks. The empirical evidence also suggests that board size and board independence have a significant positive impact on risk-taking for both samples. In contrast, gender diversity shows an inverse relationship with risk-taking. Using the dynamic panel regression by Seo et al. (2019), the study confirms non-linearities between ERM, CG and risktaking. Evidence from the South African sample indicates that ERM significantly increases insurers’ risk-taking beyond the threshold level. Again, the South African sample shows significant threshold levels for board size, gender diversity and board independence at 10.03, 0.274 and 0.547, respectively. The Ghanaian sample also documents significant threshold levels at 7, 0.286, and 0.692. The study recommends that insurers consider the significant threshold levels to determine the optimum level of risk that must be pursued.
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    The effects of politics, institutions and corporate governance on South Africa’s FDI flows
    (2021) Mokgashi, Moshibudi
    This paper explores the linkage between political risk, corporate governance, institutions and foreign direct investment inflows in the context of South Africa. The study was prompted the by the ever-changing political stability of the country, corporate governance and corruption challenges and their impact on doing business in SA. It is conducted using secondary data for World Governance Indicators (WGI) collected from World Bank’s online database and World Competitiveness from the World Economic Forum (WEF). The relationship was estimated using the Generalised Method of Moments (GMM) econometric technique for the period of 1996 to 2019. For political risk and institutions, governance variables were used. These are rule of law, political stability, control of corruption, voice and accountability, government effectiveness, and regulatory quality. For corporate governance, Ethical Behaviour of Firms and Efficacy of Corporate Boards competitiveness variables were used. Trade Openness, Inflation Rate and Gross Domestic Product growth were used as control variables. The findings of this report indicate that weak governance impacts FDI inflows negatively. The econometric estimates show that tolerance for corruption, government ineffectiveness, lack of rule of law, political instability, poor regulatory quality and accountability have negative impact on FDI inflows. Whilst all six variables indicated significant impact on FDI, rule of law and lack of control of corruption show the most impact. The implication is that this should be an area of focus to improve and therefor positively impact FDI. Overall, the government should reduce political instability and policy makers should employ policies and strategies to improve doing business in South Africa to attract and maintain investors