THE IMPACT OF CORPORATISATION ON THE ECONOMIC VALUE ADDED OF SOUTH AFRICAN STATE-OWNED ENTERPRISES

Abstract

The purpose of this research was to determine what economic value was created following the corporatisation of South African state-owned enterprises into public companies with the stated aim of maximising shareholder value. The research was conducted amongst a convenience sample of thirty state-owned enterprises listed as major public entities or national business enterprises in schedules 2 and 3b to the Public Finance Management Act of No 1 1999. After the year of corporatisation was identified, the annual financial statements of the stateowned enterprises were reviewed. This enabled a comparison to be made between the economic value added, return on equity and return on assets calculated for each SOE before and after corporatisation. The results show that the mean EVA was negative both before and after corporatisation while improvements in mean return on equity and mean return on assets were observed post corporatisation.