African Companies Research Articles

Audit Committees in South Africa in Terms of the Companies Act 71 of 2008: Policy Rationale, Role and Contribution of Audit Committees towards Financial Reporting

In recent times the world's business community has seen an overwhelming surge of serious corporate governance and financial reporting scandals in both the private and the public sectors. These governance collapses happened despite the fact that the majority of these companies have audit committees. This article critically examines the provisions of the Companies Act 71 of 2008 relating to the establishment and maintenance of audit committees in South African companies. The focus is particularly on the policy rationale, and the role and contribution of audit committees towards financial reporting in South Africa. The purpose is to demonstrate that audit committees play a key role in the production of dependable financial statements and reports for the benefit of the company's stakeholder community. This article highlights the relationship between the effectiveness of audit committees and good corporate governance, as well as accurate financial reporting. In other words, where there is a more effective audit committee, there is a high likelihood of accurate and dependable financial statements and other financial reports.

The catalytic effect of digitalization and health measures during COVID-19 on corporate social responsibility in the African context

Purpose This study aims to examine the effect of digitalization and sanitary measures during the COVID-19 pandemic on corporate social responsibility (CSR) in the African context. While CSR has traditionally been analyzed in developed markets, this paper explores how multinational subsidiaries can leverage CSR practices to create financial opportunities and market stability for themselves and their communities in Africa. Design/methodology/approach The authors use a panel of data from six listed African companies for the period ranking from January 2006–2022 to analyze the effect of financial performance (FP), digitalization and health measures on the social responsibility of these companies. The authors provide a robust test that improves the understanding of the impact of pandemics and innovation on CSR, using Machine Learning (ML) linear regression. Findings The results show that the social responsibility of African companies is highly dependent on FP and digitalization. On the other hand, the authors demonstrate that the moderating role of epidemic instability negatively affects social responsibility through FP, but on the other hand strengthens CSR in the presence of digitalization. The results of the initial analysis remain largely unchanged, demonstrating the validity and robustness of the empirical results through ML models. This article highlights some of the obstacles and opportunities for CSR adapted to the crisis context. The authors conclude that adjusting innovation strategies improves the forecasting performance of responsible companies, especially in a context of instability. Research limitations/implications The paper clearly shows that CSR literature varies across different regions. Given that the financial market in Africa is characterized by a lack of opportunity for innovation as well as financial stability, this paper represents an important first step in the elaboration of a CSR development strategy. In light of the results presented above, the study makes an important contribution to the literature on CSR, in particular the CSR practices of multinationals in developing countries and also provides CSR managers with various insights into the types of support they will need to leverage and improve the internal underpinnings of their CSR strategies and collaboration. Practical implications The results of this study contribute to the understanding of digital transformation in responsible business, offering empirical evidence of its benefits in tackling the health crisis. In addition, the study highlights the role of an innovative approach in enhancing reputation and developing sustainable, trusting relationships with stakeholders. Originality/value This research pioneers the academic link between innovation and epidemic crisis in responsible business, filling a notable gap and introducing a new academic perspective. In concrete terms, it provides women entrepreneurs with actionable insights into the digital strategies essential to improving business performance in a context of instability. Methodologically, the study sets a benchmark for research innovation, using ML to provide a reproducible model for exposing robust results and for future research in this evolving field.

The decline of the wage share in value-added: What have we learned from North African firms?

This study, based on a World Bank survey of 5,351 observations in Morocco, Egypt, and Tunisia, offers a detailed analysis of the factors leading to the reduction in the wage share of value added in North African companies. The findings suggest that increased capital and technological advancements, especially in patent adoption, are principal contributors to this decrease. Moreover, the intensification of both local and foreign competition, along with trade liberalization facilitated by offshoring, negatively affects the wage share. However, the influence of privatization and foreign direct investment on this trend is minimal. The research also emphasizes the need to include sectoral variability of large firms in the analysis to fully understand the underlying dynamics.

The Role of Human Resource Management in African Construction Companies

African countries have been heavily investing in construction projects, both infrastructure and superstructure. The construction industry is one the rapidly growing sectors in the continent and it greatly contributes to employment. The population increase and the urbanization in the continent, the strong growth of the construction sector is inevitable. However, there are still many crucial challenges to overcome, financing, available electrical grids, transportation, procurement, and skilled employees. Human Resources Management plays an important role within a Construction Organizations, Institutions, Associations or Companies in terms of work distribution. It is also the principal nerve otherwise the skeleton of any business that we want to achieve an efficient and effective goal in short, medium and long run time. Our case of study, GUICOPRESS - Guinea shows the real situation of building construction in Africa in general and Guinea in particular. Guinea is a large open work place which needs to be well - structured and organized, because of the lack of modern facilities around the country. Conakry the capital city has poor architecture and infrastructures. Shanties are sharing the same zone or space with luxurious buildings here and there so that it is difficult to see the beauty of the city although it is the largest city in Guinea. According to the business local magazine “Gniouma, 2020”, GUICOPRESS employs more than 10, 000 employees in Guinea and stays the leader of small and medium size companies in Guinea. This strong capacity of that enterprise is due to the strong policy implemented by its General Management Director, who likes innovating his works, by investing some huge amount of money in manpower and machinery purchasing. Beyond its financial contribution, GUICOPRESS - Guinea contributes a lot in the charity’s field through its social unit called “KPC for Humanity” assisting beggars, building schools in remote areas for poor communities.

The relationship between sustainability and financial performance of South African companies

Orientation: Environmental, social and governance (ESG) performance remains crucial information required by stakeholders as they are interested in monitoring whether companies contribute to sustainability or not.Research purpose: The study’s purpose was to determine how the sample companies scored on the three pillars of ESG performance and to determine the relationship between ESG scores and the financial performance of selected South African listed companies, with special reference to the impact of coronavirus disease 2019 (COVID-19) on that relationship.Motivation for the study: Because of crises such as the COVID-19 pandemic, companies tend to focus on their ESG-impact, resulting in them investing in sustainable operations.Research approach/design and method: Linear mixed-effect regression analysis models were developed to determine the relationship between ESG scores and financial performance. The sample consisted of 104 companies listed on the Johannesburg Stock Exchange (JSE) from 2017 to 2022.Main findings: We found that companies do not equitably score on the ESG performance pillars. We also found the following significant relationships: (1) Return on equity (ROE) positively impacts governance performance, (2) ESG positively impacts Tobin’s Q and (3) governance performance positively impacts ROE. Furthermore, the results show that sustainability and financial performance before and after COVID-19 are mainly not meaningful.Practical/managerial implications: New insights are revealed in the interests of shareholders, potential investors and company management regarding how to interpret the relationship between ESG pillars and financial ratios.Contribution/value-add: We contribute to the theory as a conceptual framework was developed to interpret the results within the shareholder’s theory.

Determinants of Human Capital Disclosure in the Mining Industry: Comparative Analysis of South African and Zimbabwean Companies

Determinants of Human Capital Disclosure in the Mining Industry: Comparative Analysis of South African and Zimbabwean Companies

An Assessment of the Socio - political and Economic impact of the Presbyterian Church of East Africa in the Eastern Region from 1915 to 2022

The Presbyterian Church of East Africa (PCEA) was brought to Kenya by the Church of Scotland Mission (CSM). The idea of the mission was initiated by the company directors of the Imperial British East African Company. The CSM had already settled in Central Kenya and established mission stations in Kikuyu and Tumutumu in 1901 and 1908 respectively. PCEA was established in the Eastern Region in 1915 by the Church of Scotland Mission (CSM). The Eastern Region was the third mission area to be established by the CSM. Their mission strategy was holistic in nature where they combined evangelism, education, medical and industrial work. Although the PCEA has been in Eastern region for more than a century, its impact has not been given much scholarly attention. This study was undertaken to in investigate the impact socio-political and economic of PCEA in the Eastern region since its inception in 1915. The study employed Descriptive survey research design. Questionnaires, oral interviews and document review were used to collect the data. The sample size for this study was 438 which included 9 presbytery moderators, 53 church ministers and 376 church members. From the 376 church members a category of 20 respondents who were identified through snow balling were engaged in oral interviews. The study established that PCEA has greatly impacted in the social, economic and political transformation in the Eastern Region over the last one century.

Social and Relationship Capital Disclosure, Business Model and Firm Value: A Comparative Study of Listed Companies in Kenya and South Africa

The increased volatility and decline in firm value has been observed for companies listed in the Nairobi Securities exchange, Kenya as evidenced by substantial variations between market-to-book values. Company disclosures in integrated reports have long been linked with firm value. However, integration of non-financial information disclosures with financial information in a single report and its worth to the company and its distinctive stakeholders has not been accorded a proper assessment in the African context. While, preceding studies in other settings have shown mixed results, emphasis has been on establishing the total effects. This comparative study was intended to determine the effect of <IR> capitals disclosure on value of listed companies in Kenya and South Africa, focusing on the role of the business model. Specifically, the role of the business model on the relationship between social and relationship capital disclosure and value of listed companies was examined in this research comparing Kenya and south Africa from 2018 to 2020. Positivist research philosophy was applied, while the research design encompassed both exploratory and confirmatory. The study was grounded on the Legitimacy theory. Firm value in this study was proxied by Tobin’s Q ratio, while, social and relationship capital was measured using an unweighted disclosure index. The study population contained 209 listed companies from which a sample of 137 was identified using purposeful sampling technique, comprising of 19 firms listed in the NSE, Kenya and 118 companies listed in the JSE, South Africa. Secondary data was collected from annual integrated reports and financial statements of the targeted firms. Preliminary analyses were conducted, such as descriptive statistics and correlation matrix. On the other hand, mediation effect was analysed by using stepwise regression method. The results depict that social and relationship capital disclosure has a statistically significant positive effect on firm values for both Kenya and South Africa. Further, business model mediates this relationship, with Kenyan listed firms manifesting inconsistent mediation while South African companies reported full/complete mediation. The study therefore recommends that social and relationship capital aspect of integrated reporting in Kenya should be made mandatory because this will improve shareholder understanding of financial statements and appropriate valuation of the firm.

A framework for using social media for organisational learning: An empirical study of South African companies

This study addresses the gap in the literature in terms of the lack of guidelines for organisations that would like to use social media to facilitate organisational learning (OL). This study presents an overarching conceptual theoretical framework that can assist organisations in integrating social media and OL. The framework helped explore at what level and what type of OL occurred from employees’ use of social media in organisations. The study used the interpretive research philosophy/paradigm, inductive approach and case studies to determine how employees use Web 2.0 tools in organisations and how that use leads to OL. The data were collected using semi-structured, in-depth interviews with three different companies and seven industry experts. The research findings were used to develop a conceptual theoretical framework with key concepts that explain how the use of social media could facilitate OL. The conceptual theoretical framework was tested and reviewed by experts. This resulted in a significant contribution to existing theory by offering guidelines on how organisations could use social media to facilitate effective OL.

Towards better governance: creating a corporate governance index for South African firms

PurposeThe purpose of this study is to construct a robust index and subindices to measure the quality of corporate governance for 266 firms listed in South Africa from 2004 to 2021.Design/methodology/approachPublic information on the compliance of King Code of Good Corporate Governance is used to construct a main index predicated on provisions relating to board characteristics, accounting and auditing and risk management. These categories are transformed into three subindices. All constructs are scored with binary coding and equally weighted.FindingsCronbach’s alpha test reveals that the index and subindices are highly reliable measures of corporate governance. The principal component analysis supports the construct validity of all measures.Research limitations/implicationsThe index is limited to only three corporate governance subcategories and only focuses on South Africa.Practical implicationsThese corporate governance indices provide governing authorities, policymakers, investors and other market participants direct information on the quality of corporate governance in South African firms.Originality/valueAs South Africa lacks a formal corporate governance indicator, the development of an appropriate corporate governance index and subindices contributes towards understanding the quality of corporate governance in South African firms. To the best of the authors’ knowledge, this is the first paper to conduct robustness tests on corporate governance indices designed for South African companies.

An evaluation of book-tax differences of South African firms

This paper evaluates the permanent and temporary differences between accounting profits and taxable income of South African companies using the data in the SARS-NT panel. It contributes to the establishment of a body of knowledge about book-tax differences of South African companies. Unlike previous research conducted on this topic in other countries, the characteristics of the whole population of South African companies are considered. The results describe the book-tax differences and evaluate the nature and trends in the creation or reversal of temporary differences in South Africa. Significant amounts of book-tax differences were merely described as ‘Other’ in the information that taxpayers submitted to the SARS, which hampers a user’s ability to interpret or use this information sensibly. We further observed that the SARS-NT panel did not contain sufficient information to describe book-tax differences and trends therein by industry. These findings suggest that these are areas to consider to improve the design of tax returns and the development of the SARS-NT panel that will benefit future research.

The Implementation of Sustainable Development Goal 13 in “BRICS” Countries” a Scoping Review

The essence of the 2030 Agenda for Sustainable Development, ratified by all member states of the United Nations in 2015, is encapsulated in the 17 Sustainable Development Goals (SDGs). The present study examines the progress made in achieving UN Sustainable Development Goal (SDG) 13 within the context of Brazil, Russia, India, China, and South Africa (BRICS), employing a business and economic perspective. The research methodology employed encompassing a comprehensive review of pertinent literature as well as a meticulous analysis of relevant documentary content. Findings from the study revealed that though businesses in BRICS countries are trying to adopt the United Nations sustainable development goal 13, But there is limited effort in Brazil in the implementation of sustainable development goal 13. In Russia most companies are committed to the implementation of united nations sustainable development goal 13, but this has been constrained by sanction and the war in Ukraine. In addition, Indian companies are fulfilling their corporate social responsibilities viewed through the United Nations sustainable development goal 13. The effort on the part of Chinese companies and the government of China in implementing the United Nations sustainable development goal 13 is commendable as various corporate social responsibility programs and public education have been implemented. In the same vein South African companies have also been seen as very active in the implementation the United Nations sustainable development goal (SDG) 13 by having very important policies built around the goal. Recommendation state that it is imperative that climate change be duly addressed within the overarching vision and objectives of the BRICS businesses as well and there should be a multi-tiered collaboration among BRICS countries to expedite the realisation of the sustainable development goals 13. Equally important harmonisation between governmental bodies, non-governmental organisations, and conscientious corporate entities can be instrumental in attaining superior outcomes regarding the sustainable development goal (SDG) 13. Future studies should include and examine more companies and additional countries in terms of overall plans for achieving the United Nations Sustainable Development Goal 13.

Does the combined assurance model affect tax avoidance? The case of South African companies

Does the combined assurance model affect tax avoidance? The case of South African companies

The current state of agile methodology utilisation in a South African insurance company

The current state of agile methodology utilisation in a South African insurance company

Effects of working capital management on the profitability of South African construction companies listed on the JSE

This study examines the correlation between inventory and accounts payable management and the profitability of construction companies listed on the Johannesburg Stock Exchange (JSE). The annual financial statements of all 13 listed construction businesses from 2009 to 2019, including statements of financial position and financial performance, were obtained from an external database for statistical analysis. The study employed multiple linear regression to assess the impact of working capital management on the financial performance of construction companies listed on the JSE. Additionally, a correlation model was utilised to investigate any potential relationships among the variables being examined. The study's findings indicate that the management of working capital has a notable impact on the profitability of construction companies listed on the Johannesburg Stock Exchange (JSE) in South Africa. Despite contradicting findings from other studies that support the opposite conclusion, this study demonstrates that effective management of working capital does not necessarily lead to a positive relationship with financial performance for financial managers of construction companies. Therefore, it is crucial to consider other aspects of management in addition to working capital.

Digital transformation at third-party logistics providers: Challenges and best practices

Background: Digital transformation (DT) is key for service providers in the logistics industry to achieve or retain a sustainable competitive advantage. However, for many third-party logistics (3PLs) in South Africa, implementing DT remains a challenge.Objectives: To explore the challenges that hinder the implementation of DT and to present the best practices that are important for achieving success in DT among South African logistics service providers.Method: This study was exploratory and descriptive. Data were collected through semi-structured interviews with a sample of 10 managers employed by South African 3PLs companies. Thematic analysis was used to analyse the data, which involved manually coding the findings, the organisation of these ‘codes’ into related areas to construct ‘descriptive’ themes and the development of ‘analytical’ themes.Results: The challenges and best practices of DT implementation centre around leadership and strategic alignment, technological integration and innovation, data management and cybersecurity, and resource optimisation and cost management.Conclusion: Substantial challenges and best practices associated with DT implementation in the logistics sector were identified.Contribution: The significance of the study lies in examining DT through the lens of 3PLs providers in South Africa, a segment not conventionally associated with innovation. The outcomes contribute to academic research and industry practice. Firstly, the findings bridge a critical gap in the existing literature, providing insight into previously unexplored DT challenges and best practices. Secondly, this study provides valuable insights into key areas, offering practical guidance for industry practitioners.

Statistical analysis of gold production in South Africa using ARIMA, VAR and ARNN modelling techniques: Extrapolating future gold production, Resources–Reserves depletion, and Implication on South Africa's gold exploration

South African gold mining is one of the main contributors to the country's economic growth and employment creation. Assessment of future gold production is pivotal for positioning the country's supply security and contribution to the projected global demand. In this study, we modelled and forecasted South African and global gold production trends (1990–2022) using the Autoregressive Integrated Moving Average (ARIMA), Vector Autoregressive (VAR), and Autoregressive Neural Network (ARNN) techniques. The study also evaluated the impact of annual productions on the collated reserves (2008–2021) and the contribution of resource–reserve conversion in sustaining gold reserves within the South African goldfields. The ARIMA (1,1,0) model, based on root mean square error (RMSE), mean absolute error (MAE), and mean absolute percentage error (MAPE), outperformed both ARNN (1,1) and VAR (2) methods. The forecast of the ARIMA model showed an increase in South Africa's gold production, with a compounded annual growth rate (CAGR) of ∼0.6%. The model also predicted an increase in global gold production, with CAGR of ∼2.2%. The analyses of reserves–production trends showed that most South African mining companies have been depleting their gold reserves due to production and were minimally converting resources to reserves, averaging at ∼2%/year from 2017 till present. The minimal conversion may also reflect the challenging mining conditions (such as mining depths and underground flooding) and the mining industry's socio-political dynamics. We demonstrated that, if the resource–reserve conversion factor is maintained (at ∼2%/year and above), the forecasted production may sustain the current reserves (at > 2000 t Au excluding tailings) but deplete ∼27 % of the resources to reserves by 2040. However, if the conversion factor continues to decline (to <1 %), the forecasted gold production will reduce the reserves to < 500 t Au with ∼3% of the resources converted to reserves.

Introduction

It is my pleasure to introduce Volume 25, No. 2 of Enterprise and Society. In this issue, we are pleased to present a special section on “Corporate Responses to Racial Unrest,” guest-edited by Michael Thate and Tyesha Maddox. The section commences with a scene-setting introduction from the guest editors, followed by three papers. The first is from Keith Hollingsworth on the aftermath of the Atlanta race riot of 1906, followed by Mattie Webb on an exercise in the art of the possible, waging the battle against Apartheid in South African workplaces. This section is rounded off by Sethulego Matebesi’s exploration of responses to civil society mobilization among South African mining companies. Taken together, these four essays break important new ground and indicate promising lines of future research.

A Critical and Comparative Analysis of the Regulation of the Office of the Chairman in Contemporary South African Companies

The role of chairman of the board of directors of a contemporary company has evolved from procedural and ceremonial to complex and demanding. This article examines the appointment, tenure, functions, and liabilities of this position, as regulated by the Companies Act 71 of 2008, the JSE Limited Listings Requirements, and the King IV Report on Corporate Governance for South Africa 2016. The aim is to ascertain whether the guidance provided to chairmen on their appointment, tenure, functions, and liabilities is clear and adequate to guide them on what is expected of them in contemporary companies. Company law in the United Kingdom and Australia is compared because this area of law has been extensively developed in these jurisdictions and may offer guidance on the regulation of the office of the chairman of South African companies. The article contends that the guidance provided to a chairman by South African legal instruments is neither clear nor adequate. It identifies several shortcomings in the regulation of the chairman and makes recommendations to enhance the South African statutory and corporate governance provisions regulating the chairman.

Coherent Transition and Implementation Roadmap for Adoption of Industry 4.0 among SMEs in Africa

The industry 4.0 technology has been in existence and development for a while now and it has been fully implemented by the “big player” manufacturing companies in the world. This paper provides an assessment of the key technologies and the low state of implementation of this technological transformation by industries in Africa and especially the SMEs. Therefore, the article gives a guide and conceptual roadmap with necessary resources, practices and strategies for the middle African companies to implement industry 4.0 in their organization and reap the benefits of this industrial and technological revolution.