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 The effect of industry nuances on the relationship between corporate governance and financial performance: Evidence from South African listed companies

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Jonty Tshipa ◽  
Leon M. Brummer ◽  
Hendrik Wolmarans ◽  
Elda Du Toit
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
South African ◽  
Resource Dependence ◽  
Stock Exchange ◽  
Listed Companies ◽  
Company Performance ◽  
Johannesburg Stock Exchange ◽  
Good Corporate Governance ◽  
The Relationship

Background: Premised on agency, resource dependence and stewardship theories, the study investigates empirically the existence of industry nuances in the relationship between corporate governance and financial performance of companies listed in the Johannesburg Stock Exchange. Aims: The main objective of the study is to understand the relationship between internal corporate governance and company performance from the perspective of three distinct economic periods, as well as industry nuances, cognisant of endogeneity issues. Setting: South Africa, as an emerging African market, offers an interesting research context in which the corporate governance and financial performance nexus can be examined empirically. Method: A sample of 90 companies from the five largest South African industries, covering a 13-year period from 2002 to 2014 (1170 firm-year observations) was examined with three estimation approaches. Results: Two key trends emerged from this study. First, the relationship between corporate governance and company performance differed from industry to industry. Second, the association between corporate governance and company performance also changes during steady and non-steady periods, which is an indication that the nexus is driven by the state of the global economy and the type of the industry. Conclusion: Evidence from the study suggests that companies should be allowed to optimise rather than maximise their corporate governance options. This finding questioned the approach of the recently published King IV Code of Good Corporate Governance, which requires Johannesburg Stock Exchange-listed companies to ‘apply and explain’ as opposed to ‘apply or explain’ as pronounced by King III Code of Good Corporate Governance.

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.

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.

The Stock Market Reaction to Board Changes: The South African Experience

2016 ◽  
Vol 15 (3) ◽  
pp. 269-294
Author(s):  
Narendra Bhana
Keyword(s):  
South African ◽  
Executive Director ◽  
Stock Exchange ◽  
Jel Classification ◽  
Share Prices ◽  
Market Participants ◽  
Johannesburg Stock Exchange ◽  
Stock Market Reaction ◽  
African Experience ◽  
The Impact

This article investigates the impact of board changes on the share prices of the companies listed on the Johannesburg stock exchange (JSE) during the period 2004–2008. Four types of board changes are investigated: new appointments, resignation, retirement and joint appointments. Market participants consider a change in the composition of a company’s board as having information content and produce statistically significant change in the share prices of the company concerned. In particular, the informational effects of new appointments are perceived differently by the market from resignations from the company board. The results also provide evidence that market reacts more favourably to the appointment of an executive director in comparison to that of a non-executive director board appointment. JEL classification: C58, D22, E44, G10, L22

scholarly journals An assessment of the impact of climate change on the financial performance of South African companies

2015 ◽  
Vol 4 (2) ◽  
pp. 49-62 ◽  
Author(s):  
Mandla Moyo ◽  
Hermina Christina Wingard
Keyword(s):  
Climate Change ◽  
Financial Performance ◽  
South African ◽  
Stock Exchange ◽  
Secondary Analysis ◽  
Climate Change Impacts ◽  
Financial Sustainability ◽  
Johannesburg Stock Exchange ◽  
Historic Data ◽  
The Impact

South African companies face uncertainty about whether they should commit resources to mitigate vulnerabilities and exploit opportunities arising from climate change. There is ambiguity over whether responding to climate change materially affects the financial sustainability of South African companies. The study sought to establish the extent to which responding to climate change impacts financial performance. Secondary analysis of historic data was used to compare the climate-change performance of 70 Johannesburg Stock Exchange listed companies to indicators of their financial performance. The research concluded that there is a positive and statistically significant correlation between climate-change performance and financial performance

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.

scholarly journals Investigating board diversity in South Africa

2015 ◽  
Vol 8 (2) ◽  
pp. 392-414 ◽  
Author(s):  
Nadia Mans-Kemp ◽  
Suzette Viviers
Keyword(s):  
South African ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Business Case ◽  
Board Diversity ◽  
Johannesburg Stock Exchange ◽  
Earnings Per Share ◽  
Significant Negative Relationship ◽  
The Relationship ◽  
Research Period

The issue of board diversity has been widely debated. Given the lack of conclusive empirical evidence, this study investigated the relationship between gender and race board diversity and the financial performance of South African companies. The sample covered 1 542 annual observations over the period 2002 to 2012. The percentage of female and black directors of companies listed on the Johannesburg Stock Exchange increased significantly over the research period. Board diversity differed considerably across industries. A statistically significant positive relationship existed between the percentage of both female and black directors and earnings per share. In contrast, a statistically significant negative relationship was found between the percentage of both female and black directors and total shareholder return. Given the lack of a clear business case, the question arises as to how board diversity on the JSE can be encouraged. The researchers recommend that more attention should be given to the development and mentoring of diverse board candidates.

scholarly journals Environmental consciousness as a factor which promotes firm green investment practices in Johannesburg stock exchange (JSE) listed firms

2015 ◽  
Vol 12 (4) ◽  
pp. 440-450
Author(s):  
Fortune Ganda ◽  
Collins C Ngwakwe ◽  
Cosmas M Ambe
Keyword(s):  
South African ◽  
Stock Exchange ◽  
Environmental Issues ◽  
Environmental Consciousness ◽  
Chi Square ◽  
Listed Firms ◽  
Johannesburg Stock Exchange ◽  
Green Investment ◽  
Positive Direct ◽  
The Relationship

Heightening consciousness concerning natural environmental issues has also resulted in high pressure on firms to introduce green friendly programs. This study explored the relationship between environmental consciousness and green investment practices in 100 South African CDP firms on the JSE over a period of 5 years (that is, 2010 to 2014). The paper analysed the data using Chi-square tests and the results demonstrates that environmental consciousness influences green investment activities in JSE listed companies. Furthermore, a positive direct relationship involving environmental consciousness and green investment activities was ascertained. The paper also produced common and major indicators of environmental consciousness for the firms under study. A brief discussion on corporate views from selected JSE listed firms in relation with environmental consciousness was also implemented.

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 Environmental Sustainability Commitment and Financial Performance of Firms Listed on the Johannesburg Stock Exchange (JSE)

2020 ◽  
Vol 17 (20) ◽  
pp. 7504
Author(s):  
Obey Dzomonda ◽  
Olawale Fatoki
Keyword(s):  
Financial Performance ◽  
Environmental Sustainability ◽  
Emission Reduction ◽  
Carbon Emission ◽  
Stock Exchange ◽  
Share Price ◽  
Environmental Compliance ◽  
Responsible Investment ◽  
Johannesburg Stock Exchange ◽  
Earnings Per Share

The importance of heeding the environmental sustainability commitment call cannot be underestimated. Laggards in terms of environmental sustainability commitment are likely to face fines and penalties as talks to tighten environmental legislation are now at an advanced stage globally. The current work assessed the link between environmental sustainability commitment and financial performance of firms listed on the Johannesburg Stock Exchange (JSE). The study was quantitative in nature with a case study research design. The longitudinal design was adopted where the researcher collected panel data from 2011–2018. The population of the study included all firms listed on the JSE Responsible Investment Index in South Africa. The sample constituted of 32 firms listed on the Financial Times Stock Exchange FTSE/JSE Responsible Investment Index in South Africa. The researchers employed the panel regression analysis model to analyze the data. Specifically, the Feasible Generalized Least Squares regression model was used in this study. Financial performance was treated as the dependent variable as measured by earnings per share and share price. The independent variables of the study included components of environmental sustainability such as carbon emission reduction and environmental compliance. Control variables such as firm size and liquidity were used in the study. The findings indicated that carbon emission reduction was positively and significantly related to earnings per share and share price. The findings further exhibited that environmental compliance was positively related to earnings per share and share price. It was concluded that firms can enhance their financial performance from environmental investment as all the hypotheses were supported. This study contributes practically towards shaping environmental policies and it also serves as motivation to listed companies that they can enhance both their profitability and market value from environmental investments.

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