Browsing by Subject "Financial Performance"

Now showing 1 - 2 of 2
  • No Thumbnail Available
    Item
    Open Access
    Capital structure and company performance: Did the COVID-19 pandemic matter?
    (2025) Ganesh, Shivaal; De Jesus, Carlos
    PURPOSE The aim of this study is to measure the significance of the relationship between leverage and the financial performance of 137 non-financial companies from 2016 to 2023. This study also aims to draw comparisons between this relationship during the pre-COVID-19 Pandemic of 2016 to 2019, over the full period of 2016 to 2023, and post the start of the COVID-19 Pandemic, 2020 to 2023. METHODOLOGY A two-step least squares Generalised Method of Moments panel regression model using a forward orthogonal deviation to measure the significance of the relationship was utilised. This was accompanied by model robustness checks: Breusch-Godfrey Pagan, Lagrange-Multiplier, Durbin-Watson and Arellano and Bond Serial Correlation tests. FINDINGS This study identified multiple negative relationships that were statistically significant across the periods that were analysed. This includes total liabilities and return on equity (ROE) for the pre-COVID-19, COVID-19, and full periods. Non-current liabilities and ROE in the pandemic and full periods but not in the pre-pandemic periods. Current Liabilities and ROE for the pre-COVID-19 period and full period but were insignificant for the COVID-19 period. Total liabilities and return on assets (ROA) were found for the full period, but insignificant for the pre-COVID-19 and COVID-19 periods. Non current liabilities and ROA for the pre-COVID-19, COVID-19 and full periods. Current liabilities did not exhibit any statistically significant relationships with ROA for all three periods. From the findings of this study, we can conclude that companies should exercise caution when deciding to utilise leverage during crisis and non-crisis periods as it can harm financial performance. It therefore highlights the importance of financing strategies during periods of low economic activity. ORIGINALITY This study provides new evidence on the relationship between leverage and financial performance from a South African context. Additionally, it compares the relationships between the COVID-19 Pandemic and pre-COVID-19 periods, determining if the pandemic had any impact on the relationship. Three leverage variables are used: total, non-current- and current liabilities to evaluate the relationship of each type of leverage measure with financial performance.
  • Thumbnail Image
    Item
    Open Access
    Corporate governance and financial performance of long-term insurance companies in South Africa
    (2019) Zyambo, Kalwani; Alhassan, Abdul Latif
    The research examines the effect between corporate governance and company-specific variables to financial performance among a sample of long-term insurance companies in South Africa from 2011 to 2016. The study employed a panel regression technique using board size, board independence, audit committee size and CEO tenure as proxies for corporate governance while controlling for firm size, reinsurance usage and leverage. The proxies used for financial performance were underwriting profits, return on assets (ROA) and returns on equity (ROE). The findings show that board size is the only corporate governance variable that is statistically significant with financial performance in the sample of South African longterm insurance providers. The remaining corporate governance variables did not have a statistically significant relationship with financial performance because each company in the sample set them in line with the recommendations outlined in the King Report IV on Corporate Governance. The implication of the adherence to the recommendations in the King Report IV on Corporate Governance reduced the variation in corporate governance structures between the companies in the sample. The findings also show leverage as the only control variable that is statistically significant with financial performance in the sample. The dissertation recommends that the corporate governance guidelines outlined in the King Report IV on Corporate Governance be made statutory in the South African longterm insurance sector, because these guidelines do not adversely affect the financial performance in a statistically significant way. Further, the dissertation recommends a board size ceiling be set in the sector to address the observed negative and statistically significant relationship between board size and financial performance. Finally, the dissertation recommends the use of regulation to limit the amount of leverage that companies in the sector can take on to address the observed negative and statistically significant relationship between leverage and financial performance.