scholarly journals Balancing quantitative and qualitative value-creation reporting

2021 ◽  
Vol 24 (1) ◽  
Author(s):  
Cornelie Crous ◽  
Marike C. Van Wyk
Keyword(s):  
Cash Flow ◽  
Value Creation ◽  
Stock Exchange ◽  
Integrated Reporting ◽  
Reporting Practices ◽  
Johannesburg Stock Exchange

Method: The demand for a balanced disclosure of quantitative and qualitative value creation in an organisation and for its stakeholders has increased in recent years.Aim: Therefore, this study focused on the disclosure of 97 companies listed on the Johannesburg Stock Exchange over a period of five years (2015–2019).Method: A three-phased content anlaysis was followed.Results: The researchers found that value-creation disclosures are mostly concerned with quantitative value creation, and that they focus on value concepts, such as returns to investors, cash flow, increase in employee numbers, and benefits to employees. Some companies have progressed in their integrated reporting practices and now include a reference to value creation by balancing the different forms of capital. However, their reports still do not include concrete statements or definitions about what value creation is considered to be; neither do they disclose qualitative value-creation concepts.Conclusion: The authors thus conclude that imbalanced reporting skewed towards quantitative value concepts persists.

scholarly journals Strategy disclosures by listed financial services companies: Signalling theory, legitimacy theory and South African integrated reporting practices

2017 ◽  
Vol 48 (3) ◽  
pp. 73-85 ◽  
Author(s):  
W. Van Zijl ◽  
C. Wöstmann ◽  
W. Maroun
Keyword(s):  
Financial Services ◽  
Stock Exchange ◽  
Future Research ◽  
Legitimacy Theory ◽  
Environmental Strategy ◽  
Integrated Reporting ◽  
Services Sector ◽  
Reporting Practices ◽  
Johannesburg Stock Exchange ◽  
Social Environmental

This paper investigates the current extent of social-, environmental- and economic- (SEE) related strategy disclosure of companies listed in the financial services sector of the Johannesburg Stock Exchange. It uses signalling and legitimacy theory to analyse the findings from a developed SEE strategy-related disclosure checklist.The paper finds social and environmental strategy-related disclosure is still secondary to economic strategy-related disclosures. This may be due to persistent focus on providers of financial capital and the need to perform financially. Further, the subsector’s business model and how closely the subsector interacts with their customers is seen as a driver of social and environmental strategy-related disclosure to maintain their legitimacy and to reduce information asymmetry, reduce cost of capital and assure investors that these factors are being appropriately managed by the entity.Following from above, the banking, insurance and real estate subsectors presented the most strategy-related disclosure. This was linked to their high public accountability and daily interaction with customers, necessitating the need to manage their legitimacy and address adverse selection. The paper also proposes some areas for future research to understand the potential obstacles to incorporating social and environmental concerns into strategy and related disclosures.

scholarly journals Firm characteristics and excellence in integrated reporting

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Natasha Buitendag ◽  
Gail S. Fortuin ◽  
Amber De Laan
Keyword(s):  
Repeated Measures ◽  
Mixed Model ◽  
Stock Exchange ◽  
Categorical Variables ◽  
Firm Characteristics ◽  
Integrated Reporting ◽  
Johannesburg Stock Exchange ◽  
Annual Survey ◽  
The Board Of Directors

Background: Integrated reporting has attracted much attention in the past few years, and South Africa has taken the lead in its development worldwide. An annual survey is published by Ernst & Young regarding the quality of the integrated reports of the top 100 entities listed on the Johannesburg Stock Exchange (JSE).Aim: The study on which this article is based was aimed at determining whether the assessment of an entity’s characteristics can predetermine the quality of the integrated report generated by that entity. Setting: This article focuses on an analysis of the integrated reporting of the top 100 entities listed on JSE for the financial years ending in 2013, 2014 and 2015.Methods: Comparison of categorical variables, mixed-model repeated measures ANOVA and generalised estimating equations were applied to identify the best classificators to distinguish between excellent integrated reporting and those reports where progress could still be made. Results: The results show that the type of industry the entity finds itself in, the size and profitability of the entity, as well as the composition of the members of the board, have an effect on the quality of the integrated report.Conclusion: Our results indicated that the type of industry, size of an entity, the profitability and composition of the board of directors, all have an effect on the quality of the integrated reporting. Our evidence will assist current and prospective stakeholders in evaluating the expected quality of an entity’s integrated report, through the evaluation of certain firm characteristics.

scholarly journals Value creation measures: an industry-based study

2018 ◽  
Vol 67 (2) ◽  
pp. 426-444
Author(s):  
John Henry Hall
Keyword(s):  
Stock Returns ◽  
Value Creation ◽  
Stock Exchange ◽  
Shareholder Value ◽  
Value Added ◽  
Value Drivers ◽  
Content Type ◽  
Johannesburg Stock Exchange ◽  
Return On Capital ◽  
Market Value Added

Purpose The purpose of this paper is to identify the shareholder value creation measure best suited to express shareholder value creation for a particular industry. Design/methodology/approach The analysis was performed on 192 companies listed on the Johannesburg Stock Exchange, classified into nine different samples or industries. Five shareholder value creation measures were examined, namely market value added (MVA), a market-adjusted stock return, the market-to-book ratio, Tobin’s Q ratio, and the return on capital employed divided by the cost of equity. Findings An analysis of the nine categories of firms led to the identification of different measures that are suited to express value creation. Stock returns did not provide an appropriate value measure. Instead, depending on the specific industry, Tobin’s Q ratio, MVA, and the market-to-book ratio should be used to measure and express value creation. Practical implications For management, the value drivers identified for each industry present a clear indication of industry-specific variables upon which they can focus in operating activities to most efficiently increase shareholder value. Originality/value Unlike previous studies that use only one or two different shareholder value creation measures as dependent variables, this study uses five different value creation measures. Another contribution of this study is the compilation of a unique set of value drivers that explain shareholder value creation separately for each of the nine different categories of firms.

scholarly journals The readability of integrated reports

2017 ◽  
Vol 25 (4) ◽  
pp. 629-653 ◽  
Author(s):  
Elda du Toit
Keyword(s):  
South African ◽  
Stock Exchange ◽  
Value Added ◽  
Complex Nature ◽  
Integrated Reporting ◽  
Content Type ◽  
Johannesburg Stock Exchange ◽  
New Findings ◽  
African Context ◽  
Informed Reader

Purpose This is an exploratory study to investigate the readability of integrated reports. The aim of this paper is to assess whether integrated reports are accessible to their readership and add value to stakeholders. Design/methodology/approach Readability analyses are performed on the integrated reports of all companies listed on the Johannesburg Stock Exchange for 2015 and 2016. Readability results are compared by means of a correlation analysis to the results of the Ernst & Young Excellence in Integrated Reporting Awards for 2015. Findings The results show that the complex nature of the language used in integrated reports of listed companies impairs readability and, as an implication, affects the value stakeholders can derive from the information. The results from the correlation with the Ernst & Young Excellence in Integrated Reporting Awards indicate that an integrated report is considered of higher quality if it is written using complex language. Research limitations/implications The main limitation of the study lies in its exclusively South African setting, which is the only country where integrated reports are recommended as part of stock exchange listings requirements. Another limitation is the fact that integrated reports are mainly aimed at informed users and is thus compiled with the informed reader in mind, which impacts on general readability. Practical implications The results present new findings regarding integrated reporting practice, which is of interest to firms, investors, regulators, amongst others. The findings show how the value-added by integrated reports could be improved. Originality/value This study is the first to investigate the readability of integrated reports in a South African context. The results indicate that integrated reports are difficult to read and are only useful to a portion of the total intended population.

scholarly journals Conceptualising the contemporary corporate value creation process

2017 ◽  
Vol 30 (4) ◽  
pp. 906-931 ◽  
Author(s):  
Carol A. Adams
Keyword(s):  
Sustainable Development ◽  
Value Creation ◽  
Corporate Strategy ◽  
Stock Exchange ◽  
Social Contexts ◽  
Integrated Reporting ◽  
Content Type ◽  
The Sustainable Development ◽  
Corporate Reporting ◽  
The Impact

Purpose The purpose of this paper is to examine and explain the complex interrelationships which influence the ability of firms to create value for their providers of finance and other stakeholders (loosely referred to in practice as “integrated thinking”). In doing so it examines the interrelationships between: environmental, social and governance (ESG) risk; delivering on corporate strategy; non-financial corporate reporting; and, board oversight. Design/methodology/approach Interviews were conducted with board chairs and non-executive directors of large listed companies on the Johannesburg Stock Exchange (where Boards are required to have a social and ethics sub-committee and approve integrated reports which have been mandatory since 2010) and the Australian Stock Exchange (where Board directors’ liability legislation results in Boards being reluctant to adopt integrated reporting which is voluntary). Findings The research finds that contemporary reporting processes, and in particular those set out in the King III Code and the International Integrated Reporting Framework, influence cognitive frames enhancing board oversight and assisting organisations in managing complexity. This results in increased awareness of the impact of ESG issues together with a broader view of value creation despite investor disinterest. Research limitations/implications A number of avenues of research are suggested to further examine the interrelationships identified. Practical implications The research assists the development of practice and policy by articulating and enhancing the understanding of linkages, which loosely fall under the vague practitioner term “integrated thinking”. Social implications The conceptualisation can inform national and global discussions on the appropriateness of corporate reporting and governance models to achieve sustainable development and contribute to the Sustainable Development Goals. Originality/value The paper conceptualises emerging and complex interrelationships. The cross-country comparison allows an assessment of the extent to which different national social contexts with differing governance and reporting frameworks lead to different perspectives on, and approaches to, value creation.

scholarly journals The association between cash flow variables and market risk on the Johannesburg Stock Exchange: An empirical analysis

1993 ◽  
Vol 24 (3) ◽  
pp. 101-108
Author(s):  
Wessie J.A. Wessels ◽  
Johan Du P. Smith ◽  
Wim R. Gevers
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Small Sample Size ◽  
Moving Average ◽  
Explanatory Power ◽  
Market Risk ◽  
Small Sample ◽  
Important Indicator ◽  
Johannesburg Stock Exchange ◽  
Flow Variables

Cash flow from operations can be considered an important indicator of the quality of income of a company. The value of cash flow data was emphasized by Ismail Kim who found that cash-flow-based accounting betas have significant incremental explanatory power over earnings-based betas in explaining the variability in market risk. In this article similar research is reported which was conducted on a sample of companies extracted from the Industrial Section of the Johannesburg Stock Exchange and using the methodology proposed by Ismail Kim. A three year moving average smoothing procedure was also applied to the accounting return variables in order to reduce the effect of short-term influences on the cash flow. Although it was not possible from the research to obtain similar statistically significant results for the South African market (partly because of the relatively small sample size), it was found that the simple linear regression model based on the smoothed cash flow beta did provide significant explanatory power of the variability in market beta.

scholarly journals Effects of integrated reporting on the cost of capital and analysts’ forecasts errors: A study of Johannesburg Stock Exchange listed mining firms

2021 ◽  
Vol 14 (1) ◽  
Author(s):  
Bhekisisa N. Ngcobo ◽  
Mabutho Sibanda
Keyword(s):  
Stock Exchange ◽  
Equity Capital ◽  
The Body ◽  
Forecast Errors ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Integrated Reporting ◽  
Johannesburg Stock Exchange ◽  
The Cost

Orientation: Integrated reporting (IR) has gained traction over the last decade. Although IR became mandatory for all firms listed on Johannesburg Stock Exchange (JSE) in 2010, the International Integrated Reporting Council (IIRC) issued the IR framework in December 2013.Research Purpose: The study seeks to investigate the effects of IR on the cost of equity capital and analysts’ forecast errors for the mining firms listed on JSE.Motivation for the study: A large part of empirical evidence highlights benefits of IR; however, some studies still find no link between the quality of integrated reports and economic benefits for the reporting firm. It is against this backdrop that the study investigates effects of integrated reports on the cost of equity capital and analysts’ forecast errors.Research approach, design and method: We use a quantitative research design to test effects of IR on the cost of equity capital and analysts’ forecast errors. We study used a panel regression to analyse relationship amongst IR, cost of equity capital and analysts’ forecast errors.Main findings: The study found a significant negative relationship between IR scores and cost of equity and analysts’ forecast errors.Practical or managerial application: The findings of the study could incentivise managers in other jurisdictions where IR is not mandatory. Furthermore, findings may contribute to the existing discourse on firm-based benefits related to the quality of IR.Contribution or value addition: The study contributes to the body of knowledge with regard to possible benefits associated with compliance with the IR reporting framework.

scholarly journals Sustainability And Integrated Reporting In The South African Corporate Sector

2014 ◽  
Vol 1 (1) ◽  
pp. 19-42 ◽  
Author(s):  
Anria S. Van Zyl
Keyword(s):  
South Africa ◽  
Stock Exchange ◽  
Sustainability Reporting ◽  
Integrated Reporting ◽  
Implementation Challenges ◽  
Related Information ◽  
Johannesburg Stock Exchange ◽  
Two Stages ◽  
Evaluation Matrix

This article aims to determine if the adoption of Integrated Reporting by large private sector companies in South Africa has led to an improvement in the quality of sustainability-related information disclosed. This was done in two stages. The first stage comprised a literature review with the aim to develop an evaluation matrix that can be used to access the quality of the sustainability-related information being disclosed within Integrated Reports. During the second stage, empirical evidence was obtained by assessing the sustainability reporting disclosures made by the best performers according to the Johannesburg Stock Exchange (JSE) Sustainability Index. The Integrated Reporting process is still in the development phase with many companies only now developing methodologies to measure their various impacts. The study found that, although many companies are attempting or claiming to be creating Integrated Reports, the level of integration is still very low. Few companies have incorporated or understood the importance of environmental and social sustainability in achieving long-term success. It is hoped that this research will provide an evaluation matrix to assess the information disclosed within Integrated Reports as well as provide insights into the implementation challenges experienced by the early adopters in South Africa.

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