Browsing by Subject "Accounting"
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- ItemOpen AccessAccounting for employee stock options(2010) Van Zyl, Warrick Boyd; Uliana, EnricoThe use of ESOs as a form of employee remuneration has grown dramatically in recent years, fuelling a significant amount of research. The current accounting standards (IFRS 2 and IAS 33) do not reference this research and as a result the accounting records do not accurately reflect the economic nature of these transactions. This study will: 1. Evaluate the requirements of IFRS 2 and IAS 33 by developing an accounting model for each standard and comparing the current rules with this theoretical benchmark. 2. Further examine any identified differences by means of empirical tests. The objective is thus to establish a theoretically sound approach to ESO accounting that can be confirmed by empirical testing.
- ItemOpen AccessAccounting for the financial instruments listed on the South African futures exchange in the context of the International Accounting Standards Committee conceptual framework(1997) Baker, Shannon Bruce; Everingham, GeoffThe objective of this study was to evaluate the views of both preparers and users of financial statements on a number of issues related to South African Futures Exchange (SAFEX) financial instruments. These issues related to the perceptions of the SAFEX market price as a measure of fair value for financial reporting purposes, as well as perceptions of the International Accounting Standards Committee (IASC) asset and liability definition. These were formulated into the hypotheses set out in chapter 1. The objectives of the study were achieved by a literature search related to financial instruments and SAFEX, as well as empirical data collection through the use of postal questionnaires and the evaluation thereof.
- ItemOpen AccessAn empirical evaluation of the capital asset pricing model in South Africa(1986) Stewart, Alan James Harris; Knight, R FThis thesis presents an empirical evaluation of the validity of the Capital Asset Pricing Model (CAPM) in South Africa. More specifically, the behaviour of share prices on the Johannesburg Stock Exchange during the eight years from 1973 to 1980 is evaluated. The study is the first direct test of the CAPM in South Africa. The methodology employed is a cross-sectional regression technique which has been used successfully in testing overseas security markets. An extension to the usual methodology is made by comparing the results obtained using a I published market-index with those obtained using an internally generated index. The historical development and the derivation of the CAPM is discussed in the thesis, as is the relationship between the CAPM and the Efficient Markets Hypothesis. The results indicate a strong possibility that the CAPM is a valid model in a South African context. Refinements to the research methodology strengthen this conclusion. A potential problem in the interpretation of the results of tests of this sort is also discussed, as is a recent extension to the theory. The overall conclusion is that the CAPM is a valid model, however further research is required to establish this with greater certainty.
- ItemOpen AccessAn analysis into the hedging effectiveness and efficiency of the share index futures market in South Africa(1992) Levett, Peter; Page, MikeThere has been much written on the ability of futures to reduce risk thereby hedging against potential market declines. However, the effect on return has been largely overlooked. This study investigates the risk and return effectiveness of hedging and hedging strategies using share index futures (SIF) market in South Africa. The empirical analysis is based on actual market data applied in terms of the most prominent hedging strategies, namely the traditional, minimum-variance, beta and Howard & D'Antonio (H&D) strategies. As hedging effectiveness is dependent on market efficiency, an analysis of the pricing efficiency of the South African market is performed with reference to the cost-of-carry valuation model and arbitrage pricing techniques. The results overwhelmingly indicate that the minimum-variance hedge strategy is the most optimal of the four strategies in terms of both risk and return. The beta hedge performed badly in terms of both risk and return (even worse than the naive traditional hedge strategy) and often led to overhedging. The beta strategy is not considered appropriate as an estimate of the minimum-variance hedge ratio in the South African situation because the futures price fluctuates significantly more than the spot index resulting in overstated hedge ratios.
- ItemOpen AccessAn analysis of changes in liquidity around share splits(1997) Smith, Brian Ashley; Uliana, EnricoSurveys of U.S. market participants reveal a belief that liquidity improves following a share split. Contrary to this, empirical studies on U.S. markets generally conclude that liquidity worsens. These contradictory views have as yet not been reconciled. Furthermore, there is little evidence as to the charge of liquidity on the Johannesburg Stock Exchange ("the JSE"). The primary objective of this study is to understand how liquidity, as measured by trading volumes, changes around a share split on the JSE. The study also seeks to gain a more precise understanding of the nature of any change in liquidity in order that it may be related to the effect that a split has on volatility and returns. Twenty-three share splits were selected from the period between December 1990 and June 1996. These splits were screened to ensure that no contemporaneous events were present which may have influenced the results. Five study periods were then defined around each split.
- ItemOpen AccessAn analysis of the quality of environmental disclosures in the annual financial statements of selected South African companies and a suggested environmental reporting model(1994) Dewar, Nichola Jane; Everingham, GeoffEnvironmental damage has become of widespread concern, so much so that some companies are disclosing environmental information in their annual reports, the traditional medium for communication to shareholders and other users. There is no recognised reporting model or framework for the reporting of environmental information. As a result, these disclosures are often ad hoc, and objective determination of their quality is extremely difficult. Furthermore, to the writer's knowledge, no survey of environmental disclosures has been conducted in South Africa. The objectives of this dissertation included the determination of an appropriate environmental reporting model, based on the critical review of the accounting legal and economic literatures. The reporting model suggested is that of compliance with legal environmental standards, with certain additional financial information. An existing disclosure index, enabling the objective measurement of environmental disclosure quality, was extended and adapted to the South African situation. Analysis of the index scores revealed an improvement in the quality of environmental disclosures over a five year period, and that disclosures are not influenced by a company's total assets or the presence of international shareholders. Analysis of index scores on a group basis revealed that disclosures are not made as a result of a top-down approach. However, companies in similar industries in a group tended to have almost identical disclosures. Comparison of the results of the South African survey with a similar American one, revealed a significant disparity between disclosure scores for the oil, paper and steel industries. This disparity is exacerbated by the difference in time period of at least 15 years, and suggests that the difference in disclosure quality is possibly as a result of the disparity in content and enforcement of legal environmental standards. With the opening up of international markets to South African business, producers may no longer be able to ignore international environmental standards, and the poor quality of South African disclosures may well prove unacceptable. Without more effective legal environmental standards, there will be little progress towards improved environmental disclosures.
- ItemOpen AccessThe application of AC 122 to research and development, in the pharmaceutical industry : conceptual issues and implementation concerns : a case study(1998) de Waal, Margaret Suzanne; Everingham, GeoffResearch and development spending has become increasingly important over the last two decades. Despite this, the South African business community has largely ignored the South African accounting standard for research and development costs, AC 122, issued in 1994. A review of the comments received from a number of respondents to the exposure draft to AC 122 and it's international equivalent, lAS 9 (revised), suggests that the implementation difficulties associated with AC 122 are the major reason for the apparent lack of acceptance of AC 122 by the local accounting profession and industry. This research attempts to identify these implementation concerns, specifically in relation to the pharmaceutical industry, so as to provide guidance for implementing AC 122 in this industry. From an analysis performed of AC 122 and the responses of a number of members of the local and global business community, three main implementation problems associated with AC 122 were identified. These are (a) the appropriate allocation of R & D costs between research costs and development costs, (b) implementing the requirement to capitalise development costs, and (c) determining the most appropriate method and time period for amortising a development asset. The identification of these problems also highlighted that AC 122 is deficient in implementation guidance and requires the exercise of an unusually high level of subjective judgement. This study illustrates that it is possible to develop guidelines for overcoming the problems identified in the pharmaceutical industry. This research also provides an approach for similar research in other R & D intensive industries. However, the time and cost of performing such an exercise is likely to limit the industry approach to accounting for R & D costs. The research led to the conclusion that the accounting standard for research and development costs in South Africa is difficult to apply consistently in practice, and requires amendment if it is to obtain the support of the accountancy profession and commerce.
- ItemOpen AccessThe application of activity based cost and management to support competitive strategy in the banking sector : a South African case study(2007) Domingo, Tony Mendes; Chivaka, RichardIncludes bibliographical references (leaves 217-236).
- ItemOpen AccessThe audit expectation gap in Eritrea(2005) Tekleab, Ermias Estifanos; Everingham, GeoffIncludes bibliographical references (leaves 178-184).
- ItemOpen AccessDividend policy, share price and return: a study on the Johannesburg Stock Exchange(1985) Sealy, N R; Knight, Rory FThis thesis consists of an empirical investigation into the effects of firms' dividend policies on the prices of and returns realised on their ordinary shares listed on the Johannesburg Stock Exchange. A review of published theories as to whether the dividend policy of a firm ought to affect its value revealed that, under conditions approximating perfect capital markets, no dividend influence should be expected. Because of the wide range of market imperfections and their non uniform effect in the preferences they create amongst shareholders no consensus as to their aggregate influence on security returns exists. The writer's review of studies conducted by other researchers on overseas markets indicated no dividend effect. The main empirical investigation conducted by the writer into the effects of dividend policy on the value of a firm made use of cross sectional regression techniques and an expanded ex post form of the capital asset pricing model. The results of this test indicated a negative dividend preference by investors which is more likely to have resulted from the heavier taxation of dividends than capital gains, than from a dividend aversion in a perfect capital markets situation. The implication of these findings is that investors experiencing heavier taxation on dividend income than on capital gains may generally ignore the dividend policies of prospective investees, while all other investors stand to gain by biasing their investment selection toward high pay-out shares. In favouring certain pay-out ratios adequate regard must, however, be given to maintaining an adequately diversified portfolio. The test results further imply that firms may increase their value by reducing the dividend pay-out and accordingly, with capital requirements met from internal sources, reducing the amount of new capital raised through equity issues.
- ItemOpen AccessDysfunctional market or insufficient creditworthiness? : an exploration of financial constraint experienced by small, medium and micro enterprises in South Africa(2009) Von Blottnitz, Magali; Uliana, EnricoThe existence and prevalence of financial constraints has been extensively discussed in the international economic literature, and is implicit in debates on the performance and needs of South Africa’s Small, Medium and Micro Enterprises (SMMEs). However, there is little solid research measuring financial constraints among South African SMMEs. In addition, the reasons advanced for their financial constraints are often speculative and anecdotal rather than the result of sound research. The hypothesis of credit rationing, resulting from information asymmetries, is well established in theory but an additional explanatory hypothesis, the fragile financial structure of SMMEs, is often voiced by the South African finance community. With South African data being scarce and patchy, none of these hypotheses has been validated by empirical studies. The most likely reason for these gaps in literature is not a lack of interest, but the considerable difficulty of raising reliable data from SMMEs, a joint result of confidentiality, widespread informality in the sector, and the limitations of publicly available statistics in developing countries. Surveys of banks or SMMEs raise risks of partiality and limited ability of respondents to provide quantitative data, while accounting data are characterised by limited usability and reliability. This thesis attempts to address those challenges by exploring primary and secondary sources of data, combining the respective strengths of interview and financial data.
- ItemOpen AccessEffects of foreign exchange listing on the returns of South African companies(2005) Sibiya, Xolani; Uliana, EnricoThere are a number of companies that seek dual listing in foreign stock markets. The number of foreign companies that are listed in the United States alone are above 3000. Companies seek foreign exchange listing for a number of reasons including the access to foreign capital, visibility in the foreign markets and ability to effect foreign market acquisitions through use of stock listed in the foreign markets. There are also costs associated with listing in the foreign markets, including the costs of compliance (these would include stock exchange costs, accounting and auditing compliance costs) and the costs of management time. There are a lot of studies that have been conducted in this area of finance and they show varying results. The results vary from significantly positive returns in the period before and after the listing date, to significantly negative returns before and after the listing date. There are studies that found there to be no significantly positive or negative returns. There are some that found significantly positive returns in either the pre or post listing period with significantly opposite returns in the opposing period. During the years between 1997 and 2000, a number of South African companies followed a trend of listing in their shares in the foreign markets, especially taking their primary listings to the London Stock Exchange. This study examines the effects of a foreign exchange listing in the returns of the South African companies that are listed in the foreign markets.
- ItemOpen AccessEmployee reporting : investigating the demand for information amongst employees in the Western Cape(1993) Struckmann, Philip Bernhard; Everingham, GeoffEmployee reporting is a concept which gained increasing popularity in Europe from the late 1970's, and a similar trend appears to be emerging in South Africa. This growth highlighted the paucity of research in this area, particularly in the South African context. This study therefore undertook to conduct a detailed review of prior research and existing theories of employee reporting. Based on the outcome of the review, a research design was constructed, to test, on an exploratory basis, the nature and extent of the demand for information amongst employees at a company in the Western Cape. The results indicated that a strong demand for information does exist, and that this demand is affected by a number of considerations, most notably the job level, age and education. In this respect, the results tended to confirm the findings of prior research elsewhere. It was however also noted, that the employees' choices and decisions appeared to be influenced by the socio - political conditions in South Africa, which resulted in employees attaching greater importance to their employer's involvement in society than has been the case in studies elsewhere.
- ItemOpen AccessAn exploratory study of behavioural finance insights in the Small, Medium and Micro-Enterprise creditworthiness assessment process(2011) Esekow, Jeremy; Uliana, EnricoFinancial institutions are often reluctant to lend to smaller entrepreneurs due to perceived information asymmetry and lack of available collateral. At the nascent and new entrepreneurial levels, it is generally more difficult for loan applicants to provide the information required to secure the necessary funds. Inadequate financial information coupled with uninformative credit histories heighten the information opacity thus diminishing the entrepreneur's prospects of securing loan funding. Viable entrepreneurial projects may therefore remain unfunded largely due to uncertainty rather than riskiness. This study therefore highlights the creditworthiness assessment process and seeks to address the information opacity problem by looking to alternative sources of entrepreneurial information that may aid the loan officer.
- ItemOpen AccessExploring the perspectives of audit committee members on mandatory audit firm rotation in a South African context(2018) Thomson, Chelsea; Willows, GizelleThis study examines the perspectives of experienced audit committee members on mandatory audit firm rotation (MAFR) in a South African context. This follows the recent initiatives by the Independent Regulatory Board of Auditors (IRBA) to make audit firm rotation compulsory in South Africa. Semi-structured, in-person interviews were conducted with audit committee members in South Africa to explore and contribute to the existing literature on audit committee member positions on MAFR. Twenty-two audit committee members were interviewed. Key discussion areas revolved around the regulator’s intended impact of MAFR in South Africa, including the promotion of auditor independence, the lowering of audit firm market concentration and acceleration of the rate of transformation in the South African audit industry. The findings show a general consensus among the audit committee members interviewed that MAFR will not achieve any of the objectives of the IRBA and that the members are predominantly in opposition of MAFR. Furthermore, the members proposed various arguments against MAFR, illustrating how the policy has limited benefits, if any, and will introduce many monetary and non-monetary costs into the audit industry, which could negatively impact the appeal of the audit industry. The vast majority of members held the view that the primary purpose of MAFR in South Africa is not to promote auditor independence, but is rather intended to address market concentration and transformation. However, the findings indicate that MAFR is believed to not be the best solution for these issues and, as such, further research and alternative measures should be sought by the regulator.
- ItemOpen AccessHow Industry Concentration Influences the Performance of South African General Equity Funds(2018) Morton, Bronté; Willows, GizelleIndividual investors can invest in equity either through trading accounts provided by financial institutions or in equity funds with a fund manager. Fund managers will make different investing decisions that either negatively or positively influence the performance of the funds that an investor chooses to invest in. One such decision is the concentration of the fund in different companies, countries and industries. This research aims to determine how industry concentration influences the performance of South African general equity funds. Concentration is calculated using the industry concentration index formula. Over the period from 2006 to 2017, a mixed model regression, which accounts for both fixed and random effects, is used to determine the impact of concentration on fund performance. A random effect model was used as it models the variability between funds. The fixed effects that were controlled for in the model are concentration, the fund size, the gender and number of managers and the current market cycle which indicates whether the market was experiencing a financial crisis or not. The regression model is run over two models, each with two stages. Model 1 and Model 2 differ in that Model 1 includes year and quarter data as one fixed effect for time. In Model 2, the year and the quarter are included as two separate fixed effects. Stage 1 and Stage 2 differ in that Stage 1 does not consider management team variables while Stage 2 considers all variables. This research differs from prior research by considering the impact of concentration in specific industries as well as accounting for whether the market was experiencing a financial crisis or not. This research concludes that industry concentration can economically impact the performance of South African general equity funds and that, whether this impact is positive or negative depends on the industry in which the fund is concentrated.
- ItemOpen AccessThe impact of fund size on the risk adjusted performance of South African unit trust funds(2003) Hibbert, Warren T; Wormald, Michael; Uliana, EnricoThe primary objective of this study is to investigate the relationship between the sizes of South African unit trust funds, as measured by the market value of assets under management, and their respective risk adjusted returns. The study also seeks to determine the degree to which an identifiable range of asset sizes exists within which the risk adjusted fund returns are maximised. The results of the regression and ranking analysis, performed on a sample of South African unit trust funds over a ten year period, revealed that no statistically significant evidence was found to suggest that a relationship exists between fund size and total or risk adjusted return.
- ItemOpen AccessThe impact on share prices of reporting financial targets and constraints(1991) Maguire, William Alexander Arthurs; Affleck-Graves , J F; Botha, DerekThis thesis examines the impact on share prices of voluntary reporting of financial targets and constraints, particularly the target rate of return, target dividend payout ratio and target debt ratio. Hypotheses developed about of this reporting are that a positive impact on in estimation risk the potential share price impact there will be share prices through a reduction an increase in the dispersion of share price changes owing to a revision of expectations a positive impact on share prices owing to a signalling effect. The hypotheses are tested by examining share price behaviour accompanying the voluntary reporting of financial targets and constraints over the period 1974 to 1982 by thirty-four companies listed on the Johannesburg Stock Exchange. This is an event study, in which the event is defined as the first occasion on which a company reports the specified financial targets and constraints. To test for a positive impact on share prices, weekly excess returns are calculated using the market model. To test for an increase in the dispersion of share price changes, weekly variability ratios are calculated which provide a measure of returns in the event week relative to the average variability of returns in the estimation period. The controls applied in this study to demonstrate the link between the event and the share price impact are the market model, diversification of calendar dates and two control groups. The results of the study reveal a positive impact on share prices when companies first report financial targets and constraints. This is consistent with all three hypotheses. As this form of voluntary reporting has not previously been tested in this way, the results should be of interest to financial managers and to those concerned with the regulation of financial reporting in South Africa.
- ItemOpen AccessAn investigation into the adequacy and usefulness of financial risk disclosures in listed South African banks(2000) West, Craig; Everingham, GeoffThe proliferation of financial instruments in recent years has renewed the interest in financial risk disclosure and reporting. South Africa in particular has been exposed not only to the increased variety of derivative products, but has recently been re-entered to the world economy. This has created a need to review the standard of reporting by South African companies. Companies Within the financial services sector have been most impacted by these recent changes. As these companies deal in products that create and transfer risk, their financial risk reporting must be clear and detailed for the user to understand the various exposures to these risks.
- ItemOpen AccessIs the definition of "permanent establishment" ("PE"), as used in the Double Tax Agreements ("DTA's") of selected Southern African Development Community ("SADC") countries, sufficient to protect their taxing rights over their natural resources?(2011) Collop, Lance; West, CraigThis dissertation will determine whether or not the definition of a PE, as used in the DTAs of selected SADC countries, sufficiently protects the right these countries have to tax foreign companies or other non-resident taxpayers who use their natural resources profitably.