Determinants of operational efficiency on the financial health of non-life insurance companies in South Africa

The purpose of this study was to examine the extent to which South African listed companies trading on the Johannesburg Securities Exchange (JSE) are complying with IT governance imperatives in the context of the King III Code of Corporate Governance. Management information systems and usage of computers are now embedded in business processes to the extent that most firms will be dysfunctional should these tools become unavailable. The underlying theoretical setting for this study is anchored on the agency theory and the Porter’s competitive five forces model. Since there were inadequate constructs on the subject, a combination of research methods were used: desk-top review, exploratory study, and content analysis, by reviewing the annual financial statements of fifty JSE-listed companies (the main board) in South Africa. The general outcome of the study was that JSE-listed companies in South Africa were compliant with IT governance practices as prescribed in the King III Code of Corporate Governance. Most JSE-listed companies in South Africa utilized both generic and bespoke or owned-designed IT governance frameworks to meet IT governance requirements. The study also revealed that issues relating to IT governance were among priority issues for South African listed companies. The study concludes that JSE-listed companies in South Africa have indeed fulfilled their fiduciary responsibility towards IT governance.

Purpose: The purpose of the study is to investigate and analyse the effective functioning of audit committees at the largest listed companies in South Africa.Problem investigated: The modern audit committee is often seen as the panacea of the corporate world and as such is looked upon to cure all the financial reporting and control-related problems of entities. Audit committees are, however, not always as effective as they are held to be, as is evidenced by the many well-known corporate scandals and business failures that occurred where audit committees existed and fraudulent financial reporting, audit failures, internal control breakdowns and other irregularities prevailed. The modern audit committee will be of value only if it is properly constituted, is functioning effectively and if its role is clearly understood by all the parties concerned. The research problem investigated stems precisely from this issue, and the paper therefore aims to analyse the effective functioning of the audit committees at the largest listed companies in South Africa. Methodology: The study empirically tested the audit committee practices at the largest listed companies in South Africa. This was done through questionnaires addressed to the CFOs and audit committee chairs. Findings: The study found that audit committees at the largest listed companies in South Africa are well established, properly constituted, have the authority and resources to effectively discharge their responsibilities and consist of members who act independently and who have the right mix of appropriate experience, financial literacy and financial expertise amongst their members. The audit committee's role was found to be generally well understood and supported by the board and the Chief Financial Officers. It was further found that the audit committees are effective in discharging their oversight responsibilities on the board's behalf, with the only real exception being their effectiveness regarding IT-related aspects. Value of research: The study provides valuable information on audit committee practices and the effectiveness of audit committees at the largest listed companies in South Africa. These findings can therefore serve as guidelines for best practice standards for audit committees at other companies and institutions. Conclusion: Audit committees at the largest listed companies in South Africa were found to be well established and according to the views of the CFOs and audit committee chairs to be functioning effectively. Further research regarding the subject field of audit committees should focus on the status and effective functioning thereof at smaller companies, unlisted entities, higher education institutions and public sector entities.

The aim of this study is to establish the impact of social media, information sharing and knowledge sharing on firm performance among companies in South Africa, Gauteng province in particular. In as much as the issue of social media communication has received great benefits and growth within organisations, little has been researched about the impact of social media on job performance, knowledge sharing and information sharing among companies in the Gauteng province, South Africa. Social Identity Theory (SIT) has been used to explain the associations in the model. Questionnaires were distributed to both management staff and lower level employees in the companies in Gauteng province of South Africa. This study used a quantitative research methodology using Smart PLS software. This software was employed to test the relationships among the four hypotheses. The results showed that there is a positive and significant relationship among the four proposed hypotheses. Basing on the findings of this research, recommendations were made to both the top-level employees and lower level employees in the companies in South Africa. This study is expected to have real-world and academic implications to policymakers for the companies in South Africa. On top of this, the study will provide new insights and added first-hand knowledge to the existing body of literature which is meagre in South African companies.

This study contributes significantly to the literature by exploring the linearity, nonlinearity and threshold levels necessary for the micro- and macrodeterminants to stimulate insurance profitability (thus, return on assets and return on total premiums). The study employs the system generalized method of moments and the dynamic panel threshold techniques based on 71 nonlife companies in South Africa between 2013 and 2019. The findings from the linear analysis show that solvency, investment yield, premium growth, gross domestic products and urbanization are important channels for nonlife insurance profitability. Contrarily, inflation and unemployment present adverse effects. Furthermore, the results from the threshold analysis reveal nonlinearities in the relationship, which nonlife insurers must consider to achieve higher profitability. The findings highlight that solvency, insurance size and investment income stimulate profitability beyond their threshold levels, but premium growth and reinsurance reveal otherwise. The results suggest that excessive premium growth and over-reliance on reinsurance can hurt the profitability of nonlife insurers. Regarding the macroeconomic factors, the study finds that economic growth enhances profitability when it surpasses a certain threshold, while inflation hinders profitability when it exceeds a specific threshold. The study suggests that a stable economic environment is vital to the growth of the nonlife industry. In addition, insurers must employ sound underwriting and risk management practices to avoid financial distress.

This study examines the impact of capital structure on firm value within the food manufacturing sector of South Africa, addressing a critical gap in the literature on emerging markets. Using a balanced panel dataset of eight listed firms from 2007 to 2018, the research utilizes panel regression models—Common Effect (CEM), Fixed Effect (FEM), and Random Effect (REM)—with the Hausman test indicating REM as the optimal choice. Key findings demonstrate that profitability (RA), debt-to-equity ratio (DE), and firm size (FS) significantly enhance stock prices at a 1% significance level. In contrast, liquidity (CR) negatively affects stock prices (10% significance), while asset growth (AG) shows no significant impact. These results challenge traditional capital structure theories, emphasizing that South African firms strategically use debt for tax advantages despite market volatility, a stark contrast to developed economies where liquidity is typically prioritized. The study highlights the contextual significance of macroeconomic factors, such as energy shortages and regulatory policies (e.g., Black Economic Empowerment), in influencing financing decisions. By bridging the gap between classical theories and emerging market dynamics, this research provides actionable insights for policymakers to encourage sustainable capital structures, for investors to reconsider the role of liquidity in volatile environments, and for the government to develop better policies to support businesses. This research is novel; it is among the first to investigate the link between firm value and capital structure specifically for food manufacturing companies in South Africa over 12 years. It is distinctive because it frames capital structure choices within the unique industrial and economic environment of South Africa, contributing a framework for optimizing firm value in similar emerging markets.

Edible oil manufacturing companies in South Africa generate significant amounts of revenue, which they do not capitalize on. South Africa has no shortage of consumer demand for commodities. The edible oil sector is hampered by poor raw material output in the nation, insufficient financing by value-chain participants, and a shortage of specific effort and understanding in growing the value chain. The research aim was to evaluate the impact of value chain financing on profitability for South Africa's edible oil manufacturing companies via raw materials and working capital approaches. Utilizing secondary data collected from the financial statements of edible oil manufacturing companies from 2012 to 2022. Throughout the research, a positivism paradigm was applied using a descriptive retrospective panel data approach. Multiple regression analysis was used to determine the connection between the value chain financing variables (raw materials as well as working capital) and the profitability of edible oil manufacturing companies in South Africa. On financing in raw material there was a negative correlation among the two variables, but it is not statistically significant (r = -0.030, p =.424). On financing in working capital, there was a positive correlation (r =.201, p =.012), the connection between financing in creditors management and profitability in the edible oil company has a positive correlation (r =.162, p = 0.09) but is not statistically significant. The research found that raw material financing and working capital financing had no statistically significant connection to the profitability of edible oil manufacturing companies in South Africa.

Aspiring multinational companies have very few guidelines on how to expand their businesses beyond South Africa, unlike established multinational companies. The plight of aspiring multinational companies finding business opportunities beyond national borders highlights the importance of properly understanding the international business environment. The purpose of this study is to evaluate the availability of information for aspiring multinational companies. The study employs a quantitative method, and the population is 196 managers of aspiring multinational companies in South Africa. The primary data for this study was obtained by administering questionnaires to managers of aspiring multinational companies in South Africa. The findings of the study revealed that companies that have been in operation for less than three years have a challenge accessing the information to successfully penetrate multinational business markets. These challenges experienced by the newer aspiring multinational companies emanate from the fact that they do not have any guidelines on what needs to be in place and from where they can get the information. It is recommended that aspiring multinational corporations in South Africa access information on running multinational businesses, especially information on the regulatory and economic environment such as international laws, local spending, and the public environment.

Since the discovery of diamonds in Kimberley in 1871 and the Witwatersrand goldfields in 1886, the mining industry has been a major contributor to the development of South Africa. The study examined Key Performance Indicators (KPIs) published by corporate mining companies (mining houses) in South Africa in their Annual Reports, to ascertain the extent to which the exploitation of the non-renewable resources under their control was done in a sustainable manner according to criteria set out in the Global Reporting Initiative (GRI). It was clear in terms of a graphical representation that while mining houses still strongly highlighted economic performance, and the traditional health and safety (labour) issues, as well as environment and social issues, the newcomers human rights and responsibility for downstream products were ignored. This points to an inconsistent understanding of the idea of sustainability espoused by the GRI.

This article outlines and critiques the regulatory universe applicable to state-owned companies (SOCs) in South Africa. It argues that the governance of SOCs occurs within a plural regulatory universe characterised by an intricate system of norms, principles, and practices that are engendered, monitored, and enforced by state and non-state actors. The article further argues that the complexity of the regulatory universe is one of the main causes of weak governance in SOCs. This argument is premised on the realisation that a coherent, predictable, efficient, and accessible regulatory universe enables compliance and sound corporate governance. In evaluating the regulatory universe, this article follows two lines of inquiry: the first is a doctrinal and principled approach, and the second is an instrumental, policy orientated, and forward-looking analysis. The article concludes that the regulatory universe of SOCs is not only plural and complex but also incoherent and fragmented, resulting in onerous over-regulation, regulatory quandary, and uncertainty, which collectively negatively impact the quality of governance.

Orientation: Human resource practices influence the psychological contract between employee and employer and, ultimately, organisational performance. Research purpose: The objective of this study was to examine the effect of human resource practices on the types of psychological contracts in an iron ore mining company in South Africa empirically. Motivation for the study: Although there have been a number of conceptual studies on the effect of human resource practices on psychological contracts, there has been no effort to synthesise the links between these contracts and various human resource practices systematically. This study endeavoured to provide quantitative evidence to verify or refute conceptual studies on this relationship. Its findings could inform human resource strategies and, ultimately, the prioritisation of human resource practices to improve the cost-effective allocation of resources.Research design, approach and method: The researchers administered two questionnaires. These were Rousseau’s Psychological Contract Inventory (2000) and the Human Resource Practices Scale of Geringer, Colette and Milliman (2002). The researchers conducted the study with 936 knowledge workers at an iron ore mining company in South Africa. They achieved a 32% response rate.Main findings: The findings showed that most participants have relational contracts with the organisation. Another 22% have balanced contracts, 8% have transitional contracts whilst only 1% have transactional contracts. The study suggests that there are relationships between these psychological contracts and specific human resource practices. The study found that training and development was the most important human resource practice for developing relational and balanced contracts. Employees thought that they contributed more than their employer did to the relationship. The researchers developed a model to illustrate the influence of the various human resource practices on psychological contracts.Practical/managerial implications: The influence of human resource practices on relational contracts could assist organisations to invest in human resource practices. During recessions, organisations tend to reduce expenditure on human resource practices, especially training and development. The findings of this study, about the relationship between training and development and relational contracts, highlight the negative effect that this trend could have on psychological contracts, individual and organisational behaviour and, ultimately, organisational performance.Contribution/value-add: Based on this empirical study, the researchers proposed a conceptual model to illustrate the relationship between different psychological contracts and specific human resource practices, like training and development, which had the strongest relationships with relational contracts.

The study aimed to compare the effect of sound corporate governance on manufacturing companies in South Africa, Nigeria, and Ghana on financial performance. The study used a purposive sampling method to select 60 manufacturing companies, of which twenty-nine (29) were from South Africa, 17 were from Nigeria, and 14 were from Ghana. The study employed GMM and FMOLS to estimate the effect of corporate governance on the firm’s financial performance. According to the study, South Africa has the longest average board tenure at 7.85 years, followed by Nigeria at 4.7 years and Ghana at 3.9 years. The average board tenure was found to have a positive and statistically significant effect on the return on invested capital (ROIC) of the firms in South Africa and Ghana, and a positive and statistically insignificant effect was found for the firms in Nigeria. The study indicated that the firms in South Africa have the highest percentage of female directors at 24.26%, followed by Ghana at 17.8% and Nigeria at 17.3%. The study showed that female representation on the corporate board has a positive and statistically significant effect on all firms’ return on net operating assets (RONOA). The study provides policy implications for shareholders, boards of directors, and other stakeholders by enabling them to build confidence in the corporate governance structure of manufacturing companies in the three countries.

Eucalyptus tree breeders and geneticists stand to benefit tremendously from a recently announced effort to produce the first complete genome sequence for a eucalypt tree by 2010. A milestone for eucalypt research, the project will facilitate the development of new biotechnology tools that will accelerate the domestication, improvement and conservation of eucalypt tree species. We have embarked on a research venture in South Africa to study the molecular genetics of wood formation in fast-growing Eucalyptus trees and to develop biotechnology tools that can be integrated into applied tree-breeding programmes. The Wood and Fibre Molecular Genetics (WFMG) Programme, initiated in 2003, is a joint research programme of the University of Pretoria and the two largest pulp and paper companies in South Africa, Sappi and Mondi South Africa. Early objectives of the programme included the identification and isolation of candidate genes for cellulose production in Eucalyptus trees and the assessment of allelic diversity in candidate wood-formation genes. The application of DNA fingerprinting in eucalypt breeding programmes represented an early technology delivery to industry with practical, short-term benefits, which have served to offset the long-term nature of the research programme. Current research projects in the WFMG programme focus on the genetic control of carbon allocation, the transcriptional regulation of cellulose biosynthesis and the role of miRNAs and other small RNAs in wood formation in Eucalyptus. This paper provides a brief overview of research progress in the WFMG programme and discusses realistic time frames for the delivery of genome-based tree improvement tools.

The lockdown shocks resulting from the global pandemic of COVID-19 in March 2020 brought untold economic imbalance to the financial sector in South Africa. The government’s proactive alternative measure of control to the new wave of COVID-19 must be investigated to offer policy suggestions for future economic and financial planning. Consequently, this study investigated the impact of the new wave of COVID-19 on the financial market with a special interest in the twenty JSE listed companies in South Africa. To enhance the quality in the frequency of study, daily panel data from November 2020 to January 2021 were sourced from S&P Capital IQ and Google online. The impact of COVID-19 was investigated alongside other variables that can influence the return of the stock markets on twenty JSE listed companies. The variables under investigation are daily exchange rate (dollar terms), dividend-adjusted share pricing, daily COVID-19 infection rate. Both robust descriptive and fixed effects time-variant analyses were adopted as the estimating techniques. The study provided empirical evidence that there is a direct but slow link between the daily incidence of infectious COVID-19 and returns on the stock market as key variables. This positive relationship indicates that both COVID-19 and financial activities could co-habit together to enhance greater return on the stock in South Africa. Hence, lockdown may not be most appropriate to the national economy of South Africa.

Companies are putting in place systems that might assist in attaining their business goals and vision to improve the running of their business processes. Companies are looking at Business Intelligence (BI) as a means to attain a competitive edge over competitors, predict future trends, improve strategic decision making, facilitate quick and reliable decision making, or make the day-to-day running of business easier. The study looks at the perspective of middle to top management on the context of BI, with main focus on the technical capabilities of BI within medium to large companies in South Africa. To obtain factors relevant to the South African business context, an online survey was conducted with various sectors of South African industry. The study is part of research conducted collaboratively by the University of the Western Cape and Neu-Ulm University of Applied Sciences in Germany. It focuses on exploring usage of Business Intelligence Systems (BIS) together with Corporate Performance. Online surveys were conducted that targeted medium to large companies in Germany and South Africa by questioning middle to top management on issues surrounding BIS and Corporate Performance. On this basis online survey approach was taken to ensure required number of participants would be covered and approached. Therefore, the research adopted stratified sample method for the online survey. Stratified sampling enabled the expansion of the research by gathering and collaborating participants responses on the research question and eliminate the possibilities of unreliable sample from large population.

Segmented financial statements provide more useful information on the prospects of a diversified company than the usual consolidated financial statements. Divisional and geographical segmented financial statements improve the investor's predictive ability and make inter-company comparisons possible. As a result of pressure from investors detailed segmented disclosure is becoming a statutory requirement in the more advanced countries. Diversified companies are becoming the norm in South Africa. However, shareholders are not given segmented reports of the different divisions and geographical regions that have differing risk, profitability, and growth. The Companies Act prescribes insufficient segmented reporting by South African companies. Some of the largest and most diversified companies in South Africa are listed on the stock exchange. However, the Johannesburg Stock Exchange (JSE) has not prescribed any segmented disclosure requirements in addition to that required by the Companies Act. The lack of generally accepted accounting practice has also resulted in listed companies providing segmented reports in an arbitrary and inconsistent manner. It is recommended that the segmented disclosure requirements of the Companies Act and the JSE be amended to bring them in line with the more advanced countries. The accountancy profession should give urgent attention to providing a statement on generally accepted accounting practice relating to segmented disclosure.