scholarly journals Strategy and performance of South African listed family companies

1980 ◽  
Vol 11 (1) ◽  
pp. 5-8
Author(s):  
Rob Mackintosh
Keyword(s):  
Organizational Development ◽  
South African ◽  
Stock Exchange ◽  
Share Price ◽  
Business Policy ◽  
Johannesburg Stock Exchange ◽  
Professional Management ◽  
Small Base ◽  
And Performance ◽  
Business Family

An impressive body of theory on organizational development, performance, strategy and structure has developed over the last two decades. Much of what we know stems from direct observation (usually in the form of case-studies), first-hand experience, and common sense. Yet surprisingly little attempt has been made to test the theories and provide an empirical base with which to confirm or reject the theories. This study suggests that the traditional theories of organizational development are vindicated - that firms develop from entrepreneurial, family companies in the first stage to professional management in later stages. Furthermore, an analysis of share-price movements suggests that single business family companies on the Johannesburg Stock Exchange do not perform as well as those which adopt more diversified strategies. This study builds on the small base of previous research, and hopefully makes a contribution to our knowledge both in the academic/teaching sphere of business policy, and in the area of organizational change.'n Indrukwekkende versameling van teorie oor organisasieontwikkeling, en die prestasie, strategie en struktuur van ondernemings is oor die afgelope twee dekades ontwikkel. Ons kennis het ontstaan uit direkte waarneming (gewoonlik in die vorm van gevallestudies), eie ervaring, en gesonde verstand. Tog is min pogings aangewend om die teoriee te toets en 'n empiriese basis te skep waarvolgens die teoriee bevestig of verwerp kan word. Hierdie studie stel voor dat die tradisionele teoriee van organisasie-ontwikkeling geregverdig is - dat firmas van entrepreneuriele familie-ondernemings in die eerste stadium, tot professionele bestuur in latere stadia ontwikkel. Verder dui 'n ontleding van aandeleprys-bewegings aan dat enkelbedryf familiemaatskappye op die Johannesburgse Aandelebeurs nie so goed vertoon as die wat meer gediversifiseerde strategiee aanvaar het nie. Hierdie studie bou voort op die klein basis van vorige navorsing, en maak hopelik 'n bydrae tot kennis sowel in die akademiese/onderrigsfeer van bestuursbeleid, as op die gebied van organisasieverandering.

South African corporate governance faces key reckoning

2019 ◽  
Keyword(s):  
Corporate Governance ◽  
South African ◽  
Stock Exchange ◽  
White Collar Crime ◽  
Share Price ◽  
Content Type ◽  
Johannesburg Stock Exchange ◽  
Regulatory Changes ◽  
State Capture ◽  
Criminal Charges

Subject South African corporate governance. Significance Johannesburg Stock Exchange (JSE)-listed IT company EOH, which has seen its share price decline by over half in 2019, announced on October 11 it would press criminal charges against employees implicated in corruption. As South Africa’s institutions begin to grapple with the spectre of ‘state capture’, public pressure is growing to tackle more sophisticated ‘white-collar’ crime. Impacts Large institutional investors will increasingly refine their approach to evaluating firms, including how they determine governance quality. A major UK-based report on auditing due later this year will likely result in similar regulatory changes elsewhere, including South Africa. The Financial Sector Conduct Authority enforcement head has vowed firmer action against transgressors of financial market regulations.

An Application Of Data Envelopment Analysis To Benchmark CEO Remuneration: A South African Study

2013 ◽  
Vol 29 (5) ◽  
pp. 1509 ◽  
Author(s):  
Marli Theunissen ◽  
Merwe Oberholzer
Keyword(s):  
Data Envelopment Analysis ◽  
South African ◽  
Stock Exchange ◽  
Listed Companies ◽  
Data Envelopment ◽  
Efficiency Frontier ◽  
Cross Sectional ◽  
Johannesburg Stock Exchange ◽  
Multiple Components ◽  
And Performance

<p>The purpose of the study is twofold; firstly, to use data envelopment analysis (DEA) to estimate the technical efficiencies of Johannesburg Stock Exchange (JSE)-listed companies (per industry) to convert the multiple components of CEO remuneration into multiple company determinants, namely size and performance indicators, and secondly, to develop an efficiency frontier to serve as a benchmark to suggest acceptable CEO remuneration levels. An empirical study was executed on a sample of 221 JSE-listed companies. Cross-sectional data of CEO remuneration and company determinants were obtained from the McGregor BFA database for the 2010 financial year. The study found that CEOs from 80 of the 221 companies included in the sample emerged as the benchmark CEOs and formed the efficiency frontier against which inefficient CEOs were compared. The practical value is that remuneration committees can use this model, which is based on best practices, to simplify the structuring of reasonable CEO remuneration packages.</p>

scholarly journals A Review Of The Determinants Of Long Run Share Price And Operating Performance Of Initial Public Offerings On The Johannesburg Stock Exchange

2014 ◽  
Vol 13 (5) ◽  
pp. 1161 ◽  
Author(s):  
Chimwemwe Chipeta ◽  
Adrian Jardine
Keyword(s):  
South African ◽  
Initial Public Offerings ◽  
Stock Exchange ◽  
Operating Performance ◽  
Negative Relationship ◽  
International Investment ◽  
Share Price ◽  
Public Offerings ◽  
Johannesburg Stock Exchange ◽  
Long Run

This paper provides some new evidence on the determinants of long run operating and share price performance of Initial Public Offerings (IPO) on the Johannesburg Stock Exchange (JSE). It has been hypothesised that the information contained in the pre listing documents could shed some light on the aftermarket performance of South African IPO shares. In line with previous literature, South African IPO shares significantly underperformed the market on average. Additionally, there is a statistically significant negative relationship between IPO Volume and long run performance, suggesting that the South African IPO market may be subject to the fads and over optimism theory of Ritter (1991). The overoptimism hypothesis is further cemented by a negative correlation between pre IPO revenue forecast and aftermarket operating performance. Listing expenses play a moderate role in the reduction of the aftermarket performance of IPOs on the JSE. However, it appears that international investment banks have a positive influence on the aftermarket performance of IPOs on the JSE. Likewise, firms audited by the BIG 4 audit firms tend to perform well in terms of aftermarket buy and hold returns. Large firms at the time of listing tend to perform well and firms with high growth prospects at the time of listing generate a negative and significant return on their investment in total assets. Although the contingent liabilities disclosed in the prelisting reports negatively influence most of the measurers of aftermarket performance, the relationship is, by and large, insignificant.

scholarly journals The relationship between remuneration and financial performance for companies listed on the Johannesburg Stock Exchange

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Elize Kirsten ◽  
Elda Du Toit
Keyword(s):  
Financial Performance ◽  
South African ◽  
Executive Director ◽  
Stock Exchange ◽  
Share Price ◽  
Executive Directors ◽  
Best Interest ◽  
Goods And Services ◽  
Johannesburg Stock Exchange ◽  
The Relationship

Background: The executive directors of a company are the agents of the shareholders and should manage the company in the best interest of the shareholders, not only for personal gain. It is therefore important for companies to ensure that they implement remuneration policies which will result in motivated employees who will execute decisions and actions which are in the best interest of the shareholders. However, it is widely acknowledged that the relationship between company performance and executive remuneration is weak. This implies that executives are still rewarded excessive remuneration regardless of the performance of their companies. Aim: The purpose of this study was to determine whether a relationship exists between the performance-based remuneration of executive directors and the financial performance of South African companies. Setting: The study was conducted in South Africa, specifically on companies listed on the Johannesburg Stock Exchange. Methods: The study design was quantitative and made use of a Pearson correlation and generalised least squares regression with bootstrapping at a 95% confidence interval to analyse the relationship between executive director remuneration and the financial performance of 42 companies in the consumer goods and services industry of the Johannesburg Stock Exchange (JSE) from 2006 to 2015. Results: The study established that the remuneration policies in place for South African executive directors within the consumer goods and services industry seem to be affected by the share price of the company. Conclusion: In the South African environment, executive director remuneration is thus not directly related to profitability or company size, as was the case in some earlier studies. The link between executive director remuneration and share performance may be an indication that remuneration policies are based on the share price and are thus directly connected to the principle of shareholder wealth maximisation.

scholarly journals EVA and Stock Returns: Are They Correlated?

2016 ◽  
Vol 7 (2) ◽  
pp. 34-51
Author(s):  
Matione Sauro ◽  
Mashamba Tafirei
Keyword(s):  
Stock Returns ◽  
South African ◽  
Firm Value ◽  
Stock Exchange ◽  
Economic Value ◽  
Value Added ◽  
Ordinary Least Squares ◽  
Economic Value Added ◽  
Johannesburg Stock Exchange ◽  
And Performance

The study sought to examine the relationship between economic value-added (EVA) and stock returns in commercial banks listed at the Johannesburg stock exchange. Furthermore, we also investigated other traditional value measures like Dividend per Share and Return on Equity in-order to identify which metric measures firm value better. The data was analysed with the Ordinary Least Squares (OLS) method. Economic value added was found to have significant influence on the financial performance of banks. This explains why traditional performance measures have driven investors to look for alternatives, such as value based measures in most developed economies. Therefore, EVA can be reliably used to measure corporate value and performance simultaneously. This at least should be a good encouragement for South African banks to adopt Eva so as to keep up with local and international competition for foreign capital (FDIs) in global financial markets. Hence, South African banks should consider supplying EVA data when releasing annual performance figures.

The Nexus Between Johannesburg Stock Exchange and the United States Unemployment Rate Announcement: An Impulse Response Analysis

2018 ◽  
Vol 10 (3(J)) ◽  
pp. 160-168
Author(s):  
Misheck Mutize ◽  
Victor Virimai Mugobo
Keyword(s):  
United States ◽  
South African ◽  
Impulse Response ◽  
Unemployment Rate ◽  
Stock Prices ◽  
Stock Exchange ◽  
The United States ◽  
Response Analysis ◽  
Johannesburg Stock Exchange ◽  
The Us

The study explores the relationship between the unemployment rate in the United States and South Africa’s stock prices from the beginning of 2013 to the last day 2017. The objective of this paper is to examine the impact of the US unemployment rate announcement on the South African financial market. Results of Impulse Response analysis show that there is a very minimal impact from the US unemployment announcement to South Africa’s stock prices which disappears within two days of the announcement. In addition, the Johannesburg stock exchange index marginally responds to own shocks, which marginally fades away within two days. These findings imply that the changes in the US employment policies have a direct ripple effect on the South African macroeconomic environment, its investing public sentiments and corporate confidence on the future prospects of businesses.

scholarly journals Determinants of dividend pay-out policy: a case of the South African gold mining industry

2014 ◽  
Vol 11 (3) ◽  
pp. 83-94
Author(s):  
Busisiwe Carol Ringane ◽  
Patricia Lindelwa Makoni
Keyword(s):  
South African ◽  
Gold Mining ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Mining Industry ◽  
Foreign Ownership ◽  
Study Data ◽  
Managerial Ownership ◽  
Johannesburg Stock Exchange ◽  
Shed Light

This paper sought to shed light on dividend policy within the gold mining industry in South Africa. Several cause-and-effect variables of dividend policy are discussed, in order to lay down the theoretical framework for the research. These are size, managerial ownership and foreign ownership. To meet the objectives of the study, data from seven mining companies listed on the Johannesburg Stock Exchange (JSE) was analysed for a 5 year (2008-2012) period. As found in earlier studies, there is a positive correlation (r = 0.59) between the dividend policy and the size of the organisation. This was expected as no cashflow is available for distribution during the early stages of exploration, hence no dividends are paid. As the organisation grows and profit increases, there is free cashflow which can be distributed to shareholders. Managerial ownership negatively correlates with dividend pay-out (r = -0.53). Contrary, a weak correlation was observed between foreign ownership and dividend pay-out.

scholarly journals The impact of operating leverage on the capital structure of Johannesburg Stock Exchange-listed firms before and after the 2008 global financial crisis

2018 ◽  
Vol 11 (1) ◽  
Author(s):  
Matabane T. Mohohlo ◽  
Johan H. Hall
Keyword(s):  
Financial Crisis ◽  
Capital Structure ◽  
South African ◽  
Global Financial Crisis ◽  
Stock Exchange ◽  
Johannesburg Stock Exchange ◽  
The Global Financial Crisis ◽  
Operating Leverage ◽  
The Impact ◽  
The Capital Structure

The financial leverage-operating leverage trade-off hypothesis states that as financial leverage increases, management of firms will seek to reduce the exposure to operating leverage in an attempt to balance the overall risk profile of a firm. It is the objective of this study to test this hypothesis and ascertain whether operating leverage can indeed be added to the list of factors that determine the capital structure of South African firms. Forty-six firms listed on the Johannesburg Stock Exchange between 1994 and 2015 are analysed and the impact of operating leverage is determined. The results are split into two periods, that is, the period before the global financial crisis (1994–2007) and after the global financial crisis (2008–2015). The impact of operating leverage during these two periods is then compared to determine whether a change in the impact of operating leverage on the capital structure can be observed especially following the crisis. The results show that the conservative nature of South African firms leading up to 2008 persisted even after the global financial crisis. At an industry level, the results reveal that operating leverage does not have a noticeable impact on capital structure with the exception of firms in the industrials sector of the South African economy.

scholarly journals The repurchase by a holding company of treasury shares held by subsidiaries: A South African perspective

2012 ◽  
Vol 43 (4) ◽  
pp. 33-44 ◽  
Author(s):  
N. Wesson ◽  
W. D. Hamman
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Annual Reports ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Financial Reporting Standards ◽  
Holding Company ◽  
Johannesburg Stock Exchange ◽  
The Uk

This study aims to establish whether the repurchasing of treasury shares by a holding company is a regular occurrence for companies listed on the Johannesburg Stock Exchange (JSE); whether these repurchasing companies have complied with the relevant legal and reporting requirements; and what their stated motivations were for these repurchases.In a sample of 251 companies listed on the JSE from 1999 till their 2009 financial year-end, 120 (47,8%) companies executed share repurchases. Thirty-six (30%) of the 120 companies repurchased treasury shares from their subsidiaries in 55 different transactions, representing 22% of the total number of shares repurchased.Companies which repurchase treasury shares do not always comply with the legal requirements (such as obligatory Security News Agency (SENS) announcements and circulars); and the accounting requirements of International Financial Reporting Standards (IFRS) (relevant to the disclosure of the reconciliation of the number of shares in issue) are applied in an inconsistent manner in annual reports. The most common reason for the repurchase of treasury shares was that the 10% limit (on treasury shares held by subsidiaries) had nearly been reached. Various business purposes were also given. Income tax implications did not seem to be a conclusive motivation for repurchasing treasury shares.The repurchase of treasury shares by the holding company is not allowed in most other countries, like the UK, and presents unique challenges to the South African share repurchase environment. More stringent application of the JSE Listing Requirements, as well as better guidance on the IFRS disclosure requirement on the reconciliation of the number of shares in issue, is needed in South Africa. This will enable stakeholders to make better-informed decisions and will also assist research on share repurchases.This material is based upon work supported financially by the National Research Foundation. However, any opinions, findings, conclusions and recommendations expressed in this article are those of the authors alone, and the NRF does not accept any liability in regard thereto.

scholarly journals Community structure and centrality effects in the South African company network

2013 ◽  
Vol 44 (2) ◽  
pp. 35-43 ◽  
Author(s):  
I. Durbach ◽  
D Katshunga ◽  
H. Parker
Keyword(s):  
Community Structure ◽  
Social Network ◽  
South African ◽  
Stock Exchange ◽  
The South ◽  
Market Capitalization ◽  
Johannesburg Stock Exchange ◽  
The Relationship

This paper conducts a search for community structure in the South African company network, a social network whose elements are South African companies listed on the Johannesburg Stock Exchange. Companies are connected in this network if they share one or more directors on their respective boards. Discovered clusters, called communities, can be considered to be compartments of the network working relatively independently of one another, making their distribution and composition of some interest. We test whether the discovered communities of companies are (a) statistically significant, and (b) related to other attributes such as sector membership or market capitalization. We also investigate the relationship between the centrality of a company’s position in the network and its market capitalization.

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