African Bank Investment Ltd (ABIL): a South African corporate governance failure

2018 ◽  
Vol 8 (2) ◽  
pp. 1-24
Author(s):  
Stephanie Giamporcaro ◽  
Matthew Marrian
Keyword(s):  
Corporate Governance ◽  
South African ◽  
Emerging Market ◽  
Real Life ◽  
Subject Area ◽  
Complex Situation ◽  
Content Type ◽  
Responsible Investment ◽  
Teaching Case ◽  
Sustainable And Responsible Investment

Subject area The case on ABIL deals with the important issue of corporate governance, and particularly the crucial role that the board of directors plays. It highlights the complex issue institutional investors face when trying to assess the strength of a board and the quality of information and disclosure. The case is set in South Africa which is an emerging market. Study level/applicability The case targets MBA students and can be taught as part of a corporate governance or sustainable and responsible investment module or course. The case is aimed at both local and international students as the case deals with corporate governance principles that are applicable to both audiences. Where necessary, the case provides information to guide international audiences. Case overview The teaching case is set on 6 August 2014 when Ian Matthews, the Head of Equities at a South African Asset Manager, BG Wealth, gets a call while on leave. The call is from his boss, chief investment officer, Deryck Medley, informing him of the negative trading update and asking him to come back to prepare for an emergency investment committee that afternoon. The case traces Matthews’ day as he reviews the research reports BG Wealth had put together on ABIL over the previous 15 months. Matthews also recalls the process the investment team went through internally before finally deciding to invest in the company. The case highlights not only the corporate governance failures of ABIL but also the lack of consideration given to ESG factors by BG Wealth. Expected learning outcomes The case’s primary teaching objective is to highlight the importance of corporate governance. The case provides detailed insights into the area of corporate governance through the analysis of a corporate failure. Through this teaching case, the students will follow the real-life events that led to the collapse of ABIL. It is intended that the students will be forced to deal with a complex situation and will be required to develop specific solutions to the issues raised. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 1: Accounting and Finance.

The Steinhoff signals: The role of responsible investing for asset managers

2020 ◽  
pp. 1-17
Author(s):  
Hendrik Jacobus Haasbroek ◽  
Geoff Bick ◽  
Stephanie Giamporcaro
Keyword(s):  
Corporate Governance ◽  
Boards Of Directors ◽  
Financial Analysis ◽  
Real Life ◽  
List Type ◽  
Responsible Investment ◽  
Teaching Case ◽  
Responsible Investing ◽  
Asset Managers

Subject area of the teaching case: The case can be used in the subject areas of finance and in particular investments, corporate governance, ESG, or responsible investments. It is suitable for students from all financial backgrounds, from a novice in the financial markets to an expert in finance. It is, however, expected that the class should have a sound fundamental grounding in financial analysis and valuations. The purpose of this case is to prepare students for future investments they would make in whatever capacity – whether in private or listed companies – and to prepare them for future roles on boards of directors. The examples of real-life events in this case study are used to prepare students for future similar situations in which they might find themselves. Student level: This teaching case is aimed at postgraduate students pursuing an MBA or a specialist Masters in a finance programme. This case can be used as a master class in corporate governance, investments, or responsible investments. This case is also suited for an executive education class in management. It is particularly relevant to a module that focusses on investments, corporate governance, ESG, or responsible investments. Brief overview of the teaching case: The case study chronicles meetings held on 8 November 2017 at a fictional South African asset manager, Active Investment Management (AIM). These meetings discuss the firm's investment in JSE-listed Steinhoff International Holdings. The case deals with the questions that active fund managers need to address when balancing financial analysis; environmental, social, and governance (ESG) analysis; portfolio management; and the need to comply with their fiduciary duty to clients. It also looks at the need for responsible investing in decision-making. Expected learning outcomes: The understanding of the assessment around the complexities of asset management when it comes to responsible investment. To determine why institutional investors should apply responsible investment principles when making investment decisions. An understanding of the evaluation of the unique roles of the three pillars of corporate governance, namely asset managers, auditors, and the board of directors. The ability to assess how to integrate financial analysis and ESG principles in making investment recommendations.

UCOOK: growth challenges faced by a small- to medium-sized South African venture

2019 ◽  
Vol 9 (3) ◽  
pp. 1-33
Author(s):  
Geoff Bick ◽  
Jeanné Odendaal
Keyword(s):  
Learning Outcomes ◽  
South African ◽  
Business Students ◽  
Emerging Market ◽  
Growth Strategy ◽  
Sustainable Growth ◽  
Strategic Decision ◽  
Content Type ◽  
Teaching Case ◽  
Post Graduate

Learning outcomes The learning outcomes are as follows: to understand how technology can be used to create innovative entrepreneurial opportunities; to develop analytical and critical thinking skills to understand organisations, industries and their dynamics; to analyse strategic options for an entrepreneurial organisations and motivate a proposed strategic direction; and to assess the inter-functional requirements for an entrepreneurship to successfully implement a strategy. Case overview/synopsis UCOOK, a successful emerging economy SME, is confronted with the threat of retail giants (e.g. Checkers and Woolworths) entering the meal kit space. No longer the only “new kid on the block”, UCOOK has to consider a sustainable growth strategy to remain competitive. The case provides the reader with a snapshot of experiences of a meal kit entrepreneurial venture and what it entails for them to grow in the South African milieu. Principally, this case is designed to impart knowledge and stimulate a practical understanding of entrepreneurship and strategic decision-making in the meal kit industry. Additionally, the purpose is to serve as inspiration for business students to see the opportunities that lie within strategically astute emerging market ventures. Complexity academic level The primary target audience for this teaching case is postgraduate business students, especially students of entrepreneurship, strategy and e-commerce. This teaching case is intended to be used as case study in post graduate business programmes such as Master of Business Administration (MBA), a specialist Masters programme such as MM (Entrepreneurship), post-graduate diploma in management (PGDip), as well as selected executive education programmes. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 3: Entrepreneurship.

Lonmin Plc: mining and responsible investment – dangerous liaisons?

2018 ◽  
Vol 8 (2) ◽  
pp. 1-22
Author(s):  
Stephanie Giamporcaro ◽  
Marilize Putter
Keyword(s):  
South Africa ◽  
Business Students ◽  
Investment Strategy ◽  
Subject Area ◽  
Content Type ◽  
Responsible Investment ◽  
Mba Students ◽  
Ethics Course ◽  
Platinum Mining ◽  
Sustainable And Responsible Investment

Subject area The case presents a responsible investment dilemma case. Swedish institutional responsible investors have to make a choice about their investment in Lonmin, a platinum mining company whose operation are located in South Africa and has been the theatre of workers’ killings. Study level/applicability The case targets MBA students and can be taught in a corporate finance course, a corporate governance course, a business ethics course or on sustainable and responsible investment. Case overview The teaching case follows the journey of Hilde Svensson, the head of equities for a Swedish responsible investor. She has been tasked to visit the site of Lonmin in South Africa which is the theatre of a tragic workers’ unrest that led to the killings of 44 workers in August 2012. She must decide what the best responsible investment strategy is to adopt with Lonmin for the future. Expected learning outcomes The students are expected to learn about what responsible investment entails and the dilemmas that can be faced by responsible investors. The case also gives insight to business students and the complexities of environment, social and governance (ESG) analysis and how to integrate financial and ESG analysis when you are a responsible investor. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CCS 1: Accounting and Finance

Daiichi Sankyo's generic (mis) adventure: the Ranbaxy takeover

2012 ◽  
Vol 2 (8) ◽  
pp. 1-10
Author(s):  
Alka Chadha
Keyword(s):  
Corporate Governance ◽  
Pharmaceutical Industry ◽  
Management Practices ◽  
Real Life ◽  
Subject Area ◽  
Manufacturing Companies ◽  
Content Type ◽  
Theoretical Concepts ◽  
Postgraduate Students ◽  
Alliance Partners

Subject area The case offers a study of change management in the pharmaceutical industry in India. Study level/applicability The case is designed for undergraduate and postgraduate students to examine strategic decisionmaking in the context of mergers and acquisitions (M&As), firm capabilities and management practices. In particular, it has important pedagogical lessons for businesses eager to start operations in emerging countries. Students learn to recognize the unique nature of the pharmaceutical market and the factors affecting the demand and supply of drugs, including the economics of generics. The case can be discussed in one class session of approximately one-and-a-half to two hours duration. Case overview In 2012, the pharmaceutical industry in India was undergoing dynamic changes. There was keen interest among MNC pharmaceutical giants to buy up Indian generic manufacturing companies since their revenues were drying up with the impending patent expirations of many blockbuster brand name drugs. Japan's Daiichi Sankyo's had taken over the largest Indian pharmaceutical company, Ranbaxy Laboratories, known for its heritage of process innovations and market leadership. However, after the acquisition, Ranbaxy slipped to third position in the domestic market and was facing multiple problems including net losses and falling share prices, cultural differences in management practices, recall of drugs from foreign markets and a US FDA ban on its manufacturing plants. Further, Ranbaxy had always been viewed as a national champion and a customer-friendly company but drug prices had increased after the merger causing problems of affordability. The new CEO of Ranbaxy was facing a dilemma: how to regain the company's position as the market leader. Students are asked to advise the CEO of Ranbaxy how to tackle the challenges arising from the integration of an Indian company with a Japanese company. More specifically, the case focuses on M&A as a strategy for growth and also touches on issues related to competition, regulation, innovation and corporate governance. Expected learning outcomes The case discusses the different motives behind the deal for Daiichi Sankyo and Ranbaxy and why it was a strategic move by both the alliance partners. The case also raises issues of corporate governance for the management of Ranbaxy and the need for a proactive corporate social responsibility (CSR) strategy. The case provides students with the opportunity to develop their analytical skills in a real-life setting and apply theoretical concepts to the consideration of the various issues raised by the acquisition deal. Supplementary materials Teaching notes are available; please consult your librarian for access.

The South African public service wage bill deadlock in 2021: living on the edge

2021 ◽  
Vol 11 (4) ◽  
pp. 1-15
Author(s):  
Marianne Matthee ◽  
Albert Wöcke
Keyword(s):  
Fiscal Policy ◽  
Learning Outcomes ◽  
South African ◽  
Public Service ◽  
Subject Area ◽  
The South ◽  
Content Type ◽  
Academic Level ◽  
Finance Minister ◽  
The Government

Subject area Macro-Economics. Study level/applicability Undergraduate and MBA. Case overview The COVID 19 pandemic-related restrictions devastated South Africa’s economy in 2020 and although the restrictions were generally less damaging than in 2020, the government had to budget for vaccinations and rebuild the economy. Public service unions had just announced that they were demanding an increase of 4% above inflation for their members and that they were preparing for a strike. They were bitter about the fact that the South African Government had withdrawn from the last year of a three-year wage agreement in February 2020 and their members had not received an increase for the two years. These demands and Finance Minister Mboweni’s response to them had to consider the structural and cyclical impact on the fiscus and economy. Expected learning outcomes The learning outcomes are as follows: understand the general objectives of fiscal policy and stakeholders’ interests; understand the tradeoffs in fiscal policy and the implications of taking a position; and make recommendations based on reasoned judgements about those recommendations. Complexity academic level Undergraduate and MBA level courses on Macro Economics. Supplementary materials Teaching notes are available for educators only. Subject code CSS 10: Public Sector Management.

Economic role of politics and corporate governance: reforms captured in Malaysia’s setting

2017 ◽  
Vol 59 (6) ◽  
pp. 839-853 ◽  
Author(s):  
Nurul Nazlia Jamil
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Political Influence ◽  
Political Agenda ◽  
The Political ◽  
Content Type ◽  
Economic Role ◽  
Corporate Governance Reforms ◽  
Governance Reforms

Purpose This study aims to examine the economic role of politics on corporate governance reforms in one of emerging market, namely, Malaysia. Design/methodology/approach The paper is based upon a literature review analysis. Findings The Malaysian economic, political and social settings have resulted in undue state and detrimental political influence on business, and yet the corporate governance reforms undertaken seemed not be able to resolve the matter. It is suggesting that it would be beneficial for Malaysia to have more independent regulatory bodies representing a wide variety of stakeholders to improve the transparency and accountability to ensure that the reforms are effectively enforced without conflicting with the political agenda. Legal institutional reforms also may be needed to improve the structure, capacity and performance of judicial system, as it is capable to capture reliance of economic role of politics and promoting accountability in Malaysia. Research limitations/implications The economic role of politics on corporate governance reforms is merely to broaden the political strategy in the corporate sector as the change in politics can improve the effectiveness of corporate governance reforms. Moreover, the economic role of politics raises the tone of the corporate governance reforms, and it implies that policymakers need to have effective corporate governance strategy in dealing with the reforms initiatives in areas that have strong political interventions. Originality/value Regulatory and judicial implications are offered as a means to improve corporate governance in Malaysia.

Accounting conservatism, corporate governance and political connections

2017 ◽  
Vol 25 (2) ◽  
pp. 288-318 ◽  
Author(s):  
Nor Farizal Mohammed ◽  
Kamran Ahmed ◽  
Xu-Dong Ji
Keyword(s):  
Corporate Governance ◽  
Emerging Market ◽  
Political Influence ◽  
Ordinary Least Squares ◽  
Accounting Conservatism ◽  
Political Connections ◽  
Board Independence ◽  
Political Connection ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship between accounting conservatism, corporate governance and political connection in listed firms in Malaysia where political influence plays a significant role in the capital market and in many business dealings. Design/methodology/approach By utilizing 824 firm-year observations comprising large listed companies over a period of four years from 2004, this study uses ordinary least squares regression models to investigate the relationship between accounting conservatism, corporate governance and political connections in Malaysia. Multiple measures of conservatism developed by Basu (1997) and Khan and Watts (2009) are employed. Findings The results show evidence of accounting conservatism (bad news being recognized earlier than good news) in Malaysia. Further, the results reveal that better corporate governance structure in terms of board independence is positively associated with accounting conservatism while management ownership is negatively associated with it. However, political connection has a negative moderating effect on the positive relationship between accounting conservatism and board independence. The results also suggest political connections have a positive association with firm’s future performance. Originality/value This study is the first in investigating the effect of political connections on accounting conservatism in Malaysian context and how political connections negatively affect the monitoring role of the corporate boards. By directly measuring political connection and controlling for various corporate governance mechanisms and firm-specific attributes, this study contributes to enhance the authors’ understanding of the political influence in financial reporting quality and firm performance in an emerging market setting.

Sustainable and responsible investment funds in Europe

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jitka Sládková ◽  
Daniela Kolomazníková ◽  
Sylvie Formánková ◽  
Oldřich Trenz ◽  
Jan Kolomazník ◽  
...  
Keyword(s):  
Score Distribution ◽  
Investment Funds ◽  
Content Type ◽  
Responsible Investment ◽  
Responsible Investing ◽  
The Social ◽  
Sustainable Investment ◽  
Key Barrier ◽  
Sustainable And Responsible Investment ◽  
Rating Distribution

Purpose The sustainable and responsible investing (SRI) is the part of sustainable investment which focusses on mutual funds. The purpose of this paper is to map and evaluate all the active European SRI funds, their performances and correlation with the national identity. Design/methodology/approach The sample of the research was analysed with descriptive statistics, mainly the frequency, the mean and the correlation analysis. A well-known volatility is represented by the synthetic risk and reward indicator (SRRI). Other two ratings are the environmental, social and governance (ESG) funds score distribution and the ESG funds letter rating distribution. Findings SRI investment may seem to be performing better than in the funds with a different focus. The segment of SRI funds will grow for the next decade. Research limitations/implications There is a lack of definitions and clear metrics for sustainable investing. For better performance, it would be also appropriate to examine each country separately. Practical implications This paper is part of the project targeting to design a model and methodology of SI evaluation taking into account ESG factors and risks, including profitability in a selected sector. This model can be used by investors for better decision-making. Social implications The paper focusses on the funds selecting investments that fulfil ESG criteria, which are part of the social responsibility and sustainability. Originality/value An analysis of the current approaches to evaluating investments shows that the key barrier in the transitions to sustainable investment is not taking into account the ESG factors. The research in this paper includes the ESG factors in the evaluation.

Review of Saudi Arabia company law reforms and its implications on corporate governance framework- an evidence from emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lubna Javed Rizvi ◽  
Zahid Hussain
Keyword(s):  
Corporate Governance ◽  
Saudi Arabia ◽  
Financial Management ◽  
Good Governance ◽  
Emerging Market ◽  
Relevant Literature ◽  
Company Law ◽  
Content Type ◽  
Governance Framework ◽  
Vision 2030

Purpose This paper aims to review the literature of CG regime in Saudi Arabia, an emerging market for several compelling reasons. Most of the earlier literature on corporate governance subjects mainly aimed at large emerging economies. To date, there is a lack of studies examining the following: authorities and obligations, subcommittees and the regulatory system in Saudi Arabia. Therefore, this paper is an attempt to bridge this gap by reviewing the current laws, regulation, trends and key reforms in corporate governance framework in the country as the current amended laws focused to offer more competence and precision to the regulatory setting in line with the development of the Saudi Arabian stock market and the influx of foreign reserves. Design/methodology/approach The current paper has espoused a content analysis approach in which relevant literature was deliberated and studied. Findings The amended CG rules include some developments into corporate governance and substitutes the earlier version of the long overdue regulation of 1965. The new 2017 implemented Code will reinforce the implication of good governance as a condition model for accomplishing good financial management in the country. This study has provided an overview of the evolution and development of corporate governance in Saudi Arabia by highlighting the key reforms. Research limitations/implications This study has implications for the policymakers and institutional bodies to review the current developments and progress in the country’s overall corporate governance framework in an attempt to attract more foreign direct investment. Saudi Arabia is among the nations that have a potential for huge foreign investments due to its plan of expanding its economy “Vision 2030.” Therefore, this paper will aid foreign investors in deciding to invest in the country after reviewing the current developments in an attempt to implement vision 2030. Originality/value This study contributes to existing literature by examining the current trends in CG, with the discussion on the development of company law in Saudi Arabia which emphasizes on sections that borders on corporate governance.

Short-sale refinancing and earnings response coefficient: evidence from China

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tingli Liu ◽  
Ying Jiang ◽  
Lizhong Hao
Keyword(s):  
Corporate Governance ◽  
Property Rights ◽  
Emerging Market ◽  
Earnings Quality ◽  
Sample Selection ◽  
Short Selling ◽  
Content Type ◽  
Short Sale ◽  
Earnings Response ◽  
The Impact

Purpose Although short selling has been legalized in China for nearly 10 years, due to the existence of short-sale constraints, its impact on corporate governance of listed companies remains unclear. This paper aims to examine the impact of short-sale refinancing on earnings quality after the short-selling constraints have been released. The authors further explore whether this impact is subject to the nature of property rights and shareholding structures. Design/methodology/approach This study is based on a sample of A-share firms in China for the period 2014–2016. The authors use earnings response coefficients (ERC) as a proxy for earnings quality. To empirically examine this issue, a matching sample is generated by using propensity score matching method (PSM) to reduce sample selection bias. Findings This study provides evidence that deregulation of short selling has positive external effect on corporate governance. The results indicate that the potential short-selling opportunities can effectively suppress earnings manipulation and improve earnings quality. However, the impact of short selling on earnings quality varies for companies with different nature of property rights and shareholding structure. Originality/value To the best of the authors’ knowledge, this is the first study to investigate the relationship between short selling and earnings quality in the unique setting of short-sale refinancing. This study provides new evidence on the impact of short selling at the micro level and calls for further deregulation of short selling. In addition, this study contributes to existing studies on short-sale refinancing by examining an emerging market.

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