Browsing by Subject "Financial Reporting, Analysis and Governance"

Now showing 1 - 10 of 10
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    Analysis of the relationship between foreign shareholding and ESG performance of South African listed companies
    (2023) Addison, Kate; Herbert, Shelly
    Given the global movement towards sustainability and the stagnant economic growth of South Africa, this study seeks to determine if there is a relationship between the foreign shareholding percentage of listed companies and the environmental, social and governance (ESG) scores of these companies. Foreign investment has been identified as a driver of economic growth. This study examines the relationship between ESG scores of JSE-listed companies and the percentage of foreign shareholding of these companies from 2015 to 2019. This study relied on ESG data provided by the FTSE Russell. In analysing the data through a generalised linear mixed effects model, this study identified a positive and significant association between the overall ESG, environmental, and social scores and the percentage of foreign shareholding, respectively. Stakeholder theory suggests that companies will determine action based on the interests of all relevant stakeholders. Where foreign shareholders are concerned about ESG performance, companies increase their ESG ratings, taking both their current and future investors into consideration. This study is value-adding in providing evidence for the South African government to mandate a national transition to better ESG practices.
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    Assessing PGDA entrance requirements: Appropriate or in need of change?
    (2023) Andrew, Samuel; Carpenter, Riley
    With the decreasing student pass rates in the Postgraduate Accounting Degree (PGDA) at the University of Cape Town (UCT) as well as UCT's lowered placement in ITC pass rate rankings – an assessment on PGDA's current entrance requirements could provide insight into a way-forward. The objective of this study is to evaluate endogenous factors that affect student performance in PGDA and ITC, namely race, secondary school type, home language, gender, age, and core final-year accounting course results (Financial Reporting III (FR3), Taxation II (TAX2), Corporate Governance II (CG2), Management Accounting II (MA2), and Business Analysis and Governance (BAG)). After identifying the factors linked to success, these factors were used to determine optimal entrance requirements that maximise the success of students in passing PGDA and ITC. Finally, the recommended entrance requirements were assessed against current and old entrance requirements and the effects of these requirements on student diversity was considered. A quantitative research method was used – comprising of stepwise regression, multivariate regression, and logistic regression models, together with receiver operator curves. The data was obtained from a sample of students that had commenced PGDA in 2018, 2019 and 2020 at UCT. The findings indicate that race and prior academic performance are the best predictors of academic success, however race was not considered when setting entrance requirements. Interesting findings were identified between core undergraduate courses and success in the four PGDA courses and ITC as not all undergraduate courses predicted academic success. Specifically, the lack of a significant relationship between core accounting subject – FR3 – and postgraduate courses – CG3 and MAF – in addition to ITC success. Furthermore, a significant, negative relationship was identified between MA2 and FR4. Recommended entrance requirements were identified to have adverse effects on student diversity for access, but minimal effect on pass rates. This study adds to existing literature on student performance in tertiary accounting programmes in South Africa with a specific focus on CTA course success. These findings could be useful for the UCT in determining the most appropriate entrance requirements to set for PGDA as well as whether setting such requirements would be equitable.
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    Assessing the impact of language on the measurement of financial literacy
    (2022) Mathebula, Woxy; Willows, Gizelle
    Research in the field of financial literacy has found that black people and other minority groups, globally, underperform in financial literacy assessments, in comparison to their white counterparts. Multiple factors have been identified in literature, which try to explain the distribution of financial literacy results across demographic groups. However, none of these factors fully explain the disparity. Language has been identified as a potential factor, yet no studies have specifically explored this. A common characteristic among the underperforming group is that financial literacy assessments typically are not conducted in the participants' primary language. This paper aims to explore the impact of the language of assessment by testing whether assessing individuals in their primary language would improve their financial literacy scores. A quantitative research methodology was applied to surveys, which were disseminated in both English and isiXhosa (an African language). The survey performed is in line with existing financial literacy assessment however this study is made unique by controlling for language, to isolate its impact on the results. Statistical analysis of 240 respondents found that language was not the issue. Instead, in line with the findings of existing literature, self-efficacy and educational background are significant in determining financial literacy. These findings are key to financial literacy research and will help in the creation of financial literacy interventions. While there are no retrospective interventions for educational background, self-efficacy can be improved through targeted financial literacy intervention programmes designed to bridge the gap in financial literacy across racial groups.
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    Doing Things Differently: Transformation, Innovation and Student Success in CTA and ITC
    (2019) Kraus, Tracy Louise; Carpenter, Riley J
    The need for racial transformation within the accounting profession has been highlighted in recent years and consequently, efforts have been made by numerous players to further support accounting students pursuing the chartered accountant designation. This research focuses on an innovative postgraduate accounting programme, referred to as a Certificate in Theory of Accounting (CTA), offered by a private higher education institution, CA Connect. The research examines the factors associated with academic success in that programme as well as the subsequent initial professional board exam, known as the Initial Test of Competence (ITC). The variables considered are students' demographic details (age, gender and race), prior academic performance, prior tertiary institution, previous CTA attempts, time lapses between undergraduate and postgraduate study and class format selection. While this research repeats prior work done in public education contexts within the private higher education space, it is also novel, in that it extends prior research by examining several variables which have not been investigated before, neither in the South African context nor abroad. Three logistic regression models were developed, employing both forced entry and hierarchical regression methods. The findings confirm prior research which suggests that previous academic performance is strongly positively associated with future academic success and that race is a key determinant of success, most notably in CTA. Prior tertiary institution and attending fulltime, contact classes were also found to be associated with success at CTA level. However, adopting an after-hours, blended learning approach to CTA was found to be associated with success in the ITC. These findings provide further evidence of the need for continued grassroots interventions to allow scholars and students to build upon the strongest possible educational foundation and show a link between the innovations introduced by CA Connect and student success in the ITC.
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    Impact of King III: The relationship between corporate governance mechanisms and listing suspensions
    (2021) Mudimba, Gibson; Minter, Tessa
    In this study, the main focus was to investigate the relationship between listing suspensions and corporate governance mechanisms which are related to the board of directors. The study also examined the effectiveness of King III in improving corporate governance on companies listed on the Johannesburg Securities Exchange of South Africa (JSE). The matched pairs research design was utilised where a comparison of 56 suspended companies were selected for the study. The period covered by the study was 2006 to 2017. Control companies were selected to match all the relevant suspended companies. The matching was done in terms of time, industry and size (measured by total assets). The control company should not have been suspended in the year under consideration. With the use of the conditional logistic regression model to analyse the data, the study found that the practice of board performance evaluation significantly reduced the odds of suspension. Another key finding of the study was that the number of directors with shares in the company has a statistically significant negative correlation to the odds of suspension. A comparison of King II and King III regimes indicates a stronger corporate governance era during the King III phase. Board size, the proportion of non-executive directors, and the number of independent directors and board performance evaluations increased significantly during the King III phase. Additionally, the study notices a decrease in the number of JSE listing suspensions during the King III era as compared to King II which implies that King III brought in stronger governance measures to listed companies in South Africa. Corporate governance is a critical focal point in managing corporates, raising capital as well as performing valuations of entities. The governance aspects relating to the actions of directors appear to have a direct correlation in determining whether a company will be suspended or not from the JSE. Findings of the study have contributed to the body of literature in proving the presence of a correlation between corporate failure and the failure of corporate governance structures. The findings in this study have a significant impact on policymakers in South Africa as they continue to strengthen corporate governance.
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    Informal Sector Taxation: A Qualitative Analysis Of The Experience Of The Urban Informal Operators In Rustenburg, North West Province
    (2023) Mokgatlhe, Amogelang; Parsons, Shaun
    Most developing countries, including South Africa, consist of large informal sectors that are vital to their economies. In South Africa, the informal sector plays a significant role in both production and employment. Government revenue and spending are affected by informality. South Africa faces evident revenue and fiscal pressures. The Davis Tax Committee has highlighted the necessity of increasing tax compliance and broadening the tax base to reduce revenue shortfalls. This research is informed by the informal sector's low tax revenue contribution, that contrasts with its continuing expansion and significant GDP contribution. This study is also motivated by the scarcity of research focusing on informal sector taxation in South Africa. The research explores the perceptions of the informal operators to obtain an understanding of their tax compliance behaviour and attitude. The study employed semi-structured interviews with ten informal operators in Rustenburg in the North West Province of South Africa to obtain an in-depth understanding of their tax compliance behaviour. The research found that the informal operators generally possess a positive willingness to comply with taxation. It also revealed challenges faced by informal operators regarding tax compliance. Recommendations were made towards improving tax collection in the informal sector based on the observed tax compliance behaviour of the participating informal operators and the challenges they faced as revealed by the study.
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    'It's a long story…' - Impression Management in South African Corporate Reporting
    (University of Cape Town, 2020) Jugnandan, Shreeya; Willows, Gizelle
    Research in the field of impression management has presented evidence that suggests as a company's performance declines, the readability of its financial reports also declines in order to confound the user. In an attempt to determine whether similar impression management strategies are implemented amongst South African listed public companies, a mixed-effects linear regression model was applied to analyse data over the period 2016- 2018. Performance was regressed to the report readability measures over time, where readability was divided into the aspects of length (through the word count) and complexity (as quantified by the Gunning Fog Index). The findings indicate that as the financial performance of a South African company declines, the length of all its reports increases: including the annual financial statements, Integrated Report and the annual results market announcement. However, there is limited evidence of a relationship between complexity and performance. Therefore, when South African companies perform poorly, despite producing lengthier reports, the complexity therein is not impacted. These results thus caution users when faced with reports that are unusually lengthy in nature, because this trait could signal poor performance. Users are advised accordingly to critically analyse excessively lengthy reports in order to separate decision-useful information from the impression management related content elements. Lastly, this research contributes to the foundation of impression management research in the context of the South African capital market and puts forward several suggestions for important future research.
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    The effectiveness of an educational game in developing particular professional values, attitudes and acumens
    (2023) Jogiat, Fathima; Miller, Taryn
    The world that we live in is ever-changing at a rapid pace. In order for chartered accountants to remain relevant in our ever-changing world, it is essential that their skills evolve at the same pace. Professional values attitudes and acumens (PVAAs) are crucial skills that must be developed during the journey to becoming a chartered accountant, as required by the South African Institute of Chartered Accountants (SAICA). The purpose of this study is to develop and evaluate the effectiveness of a game that aims to further develop these skills. The game was developed and played by twenty third year Bachelor of Accounting students. A convergent mixed-method research design was applied, to obtain students' perspectives on the PVAAs they applied and developed during the playing of the game. Quantitative and qualitative data was obtained through the use of a survey and the facilitation of focus group interviews. The game was perceived to be effective in creating awareness around the importance of the development of these skills and encouraging application of them. Participants indicated that they enjoyed the game and preferred it over traditional teaching methods. The findings suggest that the game may be effective in further developing these skills in accounting students; thereby providing a practical, engaging teaching option within this challenging area of accounting education.
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    The low-risk anomaly, cost of capital and IFRS 9 implementation impact: An analysis of South African banks
    (2023) Nicolson, Duncan; De Jesus, Carlos
    Purpose This dissertation investigates the impact of IFRS 9 implementation on capital ratios and the cost of capital of listed South African banks. In order to investigate this impact, the presence of the low-risk anomaly had to be determined for South African banks. Methodology This dissertation adapts a methodology that has been used to calculate the change in the cost of capital by both Baker & Wurgler (2015) and Fatouh et al. (2020). It is a modified version of CAPM and the weighted cost of capital which includes an error term for the low-risk anomaly. Findings The presence of the low-risk anomaly was discovered in the South African banking equity market. This in combination with a reduction in regulatory capital due to increased credit loss provisions, led to an increase in the cost of capital of South African banks. Practical implications This dissertation helps to add to the growing body of literature around the presence of the low-risk anomaly in South Africa. It also provides an assessment of the impact of the implementation of IFRS 9 on banks that regulators can use to gauge future implementations of regulatory and accounting standards. Investors can also take advantage of the low-risk anomaly and “bet against the beta” to gain additional returns as compared to high-risk portfolios. Value-add New accounting standards are implemented to improve decision-useful information for investors. This dissertation observes the unintended effects of accounting standard implementation on the banking industry in a developing market. The dissertation uses the initial results of IFRS 9 implementation to measure the impact of the accounting standard on banks' regulatory capital and cost of capital.
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    Voluntary climate change disclosure in South Africa
    (2019) Mongie, Caitlin Claire; Willows, Gizelle
    There is increasing evidence that anthropogenic carbon dioxide emissions are the major cause for global warming. A changing external environment and societal pressure is driving companies to respond to climate change and to limit further contribution where possible. Despite carbon emissions still being largely unregulated and carbon disclosure not being mandatory, many companies in South Africa have voluntarily decided to reduce emissions and make disclosures to the Carbon Disclosure Project (CDP). Institutional, socio-political and economic voluntary disclosure theories all indicate that there is a pressure for companies to monitor their climate mitigation, evaluate the costs of disclosing and manage stakeholders’ pressures by producing voluntary climate change disclosure. The CDP scores the disclosure made by each company as a measure of the company’s progress towards environmental stewardship. The highest CDP score indicates that a company has leadership in its efforts to environmental stewardship and so addressed stakeholders’ concerns. This study aims to determine which factors, either company specific or individual company responses within the CDP questionnaire, influence a high CDP climate change score for South African companies. The top 100 South African companies were selected using a full Johannesburg Stock Exchange (JSE) listing as at 31 March 2017 and the climate change programme score and individual company responses to the climate change questionnaire were obtained from the CDP for the five-year period from 2013 to 2017. A random effect model was used to examine the determinants of voluntary disclosure of carbon information. The results indicate that while CDP scores have improved post the signing of the Paris Agreement in December 2015, providing incentives for managing climate change has also led to improvements in the CDP score which results in improved climate change disclosure. Furthermore, the longer the company assesses climate change risks and opportunities into the future, the better its CDP score. This research contributes a more thorough understanding of disclosure theories, as established from these results. In terms of institutional theories, institutional investors should call for incentives to motivate for climate change management because companies might then be more likely to receive a better CDP score. In terms of socio-political theories, this study’s findings indicate that managers should be made aware that the further into the future they consider climate change risk management the better because this practice will result in the company obtaining an improved CDP score, while simultaneously managing stakeholders’ perceptions of the company. Additionally, this study contributes by making recommendations for companies and policy makers.