Browsing by Author "Graham, Mark"

Now showing 1 - 6 of 6
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    Disclosure level and the cost of equity capital : South African evidence
    (2008) Swartz, Charlene; Graham, Mark
    Includes abstract. Includes bibliographical references (leaves 103-109).
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    Open Access
    DO COMPANY CHARACTERISTICS INFLUENCE THE QUALITY OF INTEGRATED REPORTING? A STUDY OF SOUTH AFRICAN JSE TOP 100 LISTED COMPANIES. LISTED COMPANIES
    (2018) Phaswana, Malilimalo; Graham, Mark
    This dissertation investigates whether a statistically significant relationship exists between a company’s corporate characteristics and the quality of its integrated report. The JSE Top 100 companies are used as the study population, with the Ernst & Young Excellence in Reporting ratings used as the framework for assessing integrated reporting quality. A multiple multivariate regression analysis was employed to assess the impact of ten company characteristics that were found to be prominent by other studies. The results show that firm size, board diversity, board independence and firms in the resource sector show a statistically significant positive association with components of integrated reporting quality as described in the Integrated Reporting Framework. The results suggest that firms with stronger adherence to good corporate practices, with firm board diversity and board independence as a possible indicator, are more responsive to the need for quality integrated reporting. Further, firms with greater accountability to stakeholders through their size of sector also appear to respond to this obligation through increased disclosures.
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    An investigation of the characteristics of companies listed on the JSE Securities Exchange that exhibit high levels of disclosure
    (2003) Crosoer, Martin; Graham, Mark
    This study seeks to remedy the omission of South Africa from the list of countries. This study follows the methodology highlighted by Cooke (1998) and investigates the relationship between level of disclosure and the variables highlighted below. This relationship was tested statistically using forward stepwise regression techniques.
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    Open Access
    Is there any evidence of a value-growth factor on the Johannesburg Stock Exchange?
    (1998) Graham, Mark
    New evidence suggests that share returns are cross-sectionally predictable in that shares which appear to be inexpensive relative to the company's underlying values (value shares), out-perform those shares that are perceived to provide substantial growth in the long run (growth shares). The magnitude of the return premium suggests that these returns are induced by factors other than risk or perhaps suggests that our measures of risk are incorrect. There now seems to be little doubt that the new evidence indicates that the cross-section of average returns are predictable and that abnormal returns can be obtained by holding value shares. This is the value-growth phenomenon. The existence of this phenomenon casts doubt on the two major paradigms of modem finance, the Capital Asset Pricing Model and the Efficient Market Hypothesis. There has been limited empirical testing in South Africa as to the existence of this internationally observed phenomenon. This study's objective is to investigate whether or not this value-growth phenomenon exists on the JSE. The study examined monthly excess returns on portfolios of value and growth shares over the period 1987 to 1996. The ratio of a company's market value to its book value of common equity was used as the measure of value and growth. The conclusions of this research study indicate that a value-growth phenomenon does exist on the JSE and that the existence of superior returns by value shares is especially marked in the period post 1992 when South Africa returned to the international financial arena.
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    A search for firm characteristics that explain option-granting behaviour in South Africa
    (2003) Miller, Taryn; Graham, Mark
    Share options have become a popular, frequently rewarding and incentive-providing form of remuneration for executive directors and other employees. Previous international research has shown that the firm's decision to grant share options may be influenced by its financial reporting situation; its tax position; the existence of conflicting interests between management and other stakeholders; as well as the firm's size and liquidity situation. The reasons why the conflict of interest has been found to be significantly associated with the granting of share options is because share options can align the interests of management with those of the shareholders and in so doing reduce the extent of agency costs. The lack of an accounting requirement to recognise share options as an expense has also been found to influence the firms' decision to grant share options depending on its financial reporting position. The firm's tax position has also been associated with the decision to grant options based on the fact that firms cannot obtain a tax deduction for the value of share options granted. Finally, large firms with liquidity constraints have been found to be more likely to grant share options, due to the lack of available cash reserves for the payment of salaries. There has been no research as to whether the above explanatory variables influence the granting of share options by South African firms. The objective of this study is to investigate whether the variables that were identified internationally as being associated with share option grants apply to grants made to South African executive directors. This study examines whether the extent of share options granted is associated with various financial reporting and tax indicators, proxies for agency costs, the firm's size and its liquidity. Data from 61 firms over 2000 and 2001 was obtained. A total of 33 firms that granted share options were examined together with 28 firms that did not. The value of share options was measured using the dividend-adjusted Black Scholes model, and the dependent variable was calculated to be the value of share options granted during the year divided by the sum of the value of share options granted and the annual cash salary paid to the executives. This variable was regressed against thirteen independent variables identified in previous research. The results of this research indicate strongly that the larger the finn and the greater the extent of future growth opportunities (represented by the ratio of research and development to total assets), the more likely it is that finns will grant options, both of which are consistent with existing theoty. Option granting behaviour was also found to differ across industries and there was some evidence that the more difficult it is to monitor executive's performance (represented by the ratio of the variance in return on equity to the variance in share price), the more likely it is that the finn will grant options. Variables that were statistically significant but in the opposite direction to what was expected were growth in assets and the market-to-book ratio, both of which were negatively correlated with option granting behaviour. TIlls inconsistency may however be due to the fact that the data from the sample may not be a true reflection of the population. Financial reporting incentives, tax disincentives, liquidity, and two proxies for agency costs (the variance of market-adjusted returns and the ratio of the variance of marketadjusted returns to total returns) were not found to be significantly associated with option granting. TIlls suggests that the lack of a requirement to recognise share options as an expense; no deductions of share options for tax purposes; the fact that executive's choose to invest in projects that yield highly variable returns; and that finns that have a large amount of noise in their share price relative to the market, do not influence the decision to grant share options in South Africa. It therefore appears that the key drivers for granting share options to South African executive directors are finn size, unclear signals between earnings performance and the quality of manager's decisions and the desire to reduce agency costs by encouraging managers to focus on long-term investment opportunities.
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    Trends in sustainability disclosures in the integrated reports of South African listed companies
    (2018) Herbert, Shelly; Graham, Mark
    Over the last 30 years organisations have increased their sustainability disclosures in response to an increased focus on corporate sustainability, which considers the economic, environmental, and social aspects of an organisation. With the introduction of integrated reporting, organisations are encouraged to use integrated thinking to create value for their organisation in the short and long term, using all of the capitals or resources available to them. The new emphasis on reporting on maximising the organisation’s human, social and relationship capital, along with its natural capital echoes the focus of sustainability reporting. However, the objectives of integrated and sustainability reporting differ in their focus, between a focus on shareholders and value creation, compared to a focus on the organisation’s impact on the environment, society, and the economy. This exploratory study examines trends in sustainability disclosure in the integrated reports of South African listed companies. It explores the trends in companies’ sustainability information in their integrated reports from 2011, when integrated reporting became mandatory in South Africa, following the implementation of the King Code of Governance Principles (King III) of 2009. It covers reporting up to 2015, when the 2013 International Integrated Reporting Framework (the Framework) of the International Integrated Reporting Council was adopted in South Africa. It also takes into account the 2013 G4 Guidelines of the Global Reporting Initiative. Interpretive content analysis is used, which involved creating a disclosure checklist based on the disclosure categories outlined in the G4 requirements. Issues relating to Broad-based Black Economic Empowerment ('BBBEE’) which are specific to South Africa were included in the disclosure checklist. This study does not seek to measure compliance with the requirements of the GRI, or the quality of the sustainability disclosures, but rather uses the requirements as a guide for sustainability disclosures that could be included in the integrated reports of South African companies. Statistical techniques were then used to determine if significant trends in disclosure were observable in the integrated reports from 2011 to 2015. The results show that there was a notable change in how sustainability disclosures are presented in the integrated reports, although there is no meaningful change in the number and type of sustainability disclosures. Industry classification, and the age and size of companies were also found to be significant in the quantity and quality of sustainability disclosures observed. This study provides insight into the integrated and sustainability disclosure practices of South African listed companies. It also examines their compliance with the guidance provided in the Framework relating to the preparation of fully integrated reports.