The differential effect of labour unrest on corporate financial performance

Abstract

Heightening labour unrest episodes have inevitably generated important results on corporate financial performance. This paper provides first-hand, empirical data to illustrate the effect of labour unrest on firm performance before periods of labour unrest (2004 to 2008) and during periods of labour unrest (2009 to 2013) in South Africa’s mining sector. Content analysis was used to gather financial performance measures (Operating profit, Return on Capital Employed and Debt to Equity Ratios) of two mining firms. Then, t-test (paired samples) were utilised to analyse the data. The findings demonstrates that operating profit during labour unrest was lower when compared to operating profit before labour unrest for both company’s A and B. Return on Capital Employed results for five years before labour unrest was greater than ROCE during the labour unrest for both companies. Then, debt to equity during the labour unrest is greater than before labour unrest for the studied companies.