South African Companies Research Articles

Rebooting State-Owned Companies in South Africa: Exploring the Viability of Singapore's State Holding Company (Temasek) Model of Ownership and Control

Rebooting State-Owned Companies in South Africa: Exploring the Viability of Singapore's State Holding Company (Temasek) Model of Ownership and Control

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.

‘Autonomy for Our Economy’: A Review of the Responsible Government Status and Economic Interest Groups in Southern Rhodesia, 1922 to the Second World War

ABSTRACT This article revisits the impact and legacy of the 1922 referendum and the subsequent granting of responsible government status to Southern Rhodesia in shaping the future economic trajectory of the self-governing colony. Governed through the chartered British South Africa Company (BSAC) from 1890, Southern Rhodesia developed as a typical colony dependent on the export of raw materials, the import of manufactured goods, external capital for economic development, and imperial control. The attainment of responsible government status three decades later gave Southern Rhodesia a unique opportunity to determine its economic affairs with minimum interference from the metropole. That autonomy was made possible by consolidated settler politics that manifested through organised civic organisations that coalesced around particular economic interests, leading to the emergence of interest groups of miners, farmers, commerce, and industrialists. These groups interacted, competed, and collaborated as they pursued their interests, and thus shaped the economic trajectory of Southern Rhodesia. This article demonstrates that unique self-governing colony status allowed Southern Rhodesia to flourish more than other colonies. It thus argues that the 1922 referendum that birthed responsible government laid the base for the diversification of the Rhodesian economy.

Flags, Stamps and Coats of Arms: Symbols and the Making of Identity in Southern Rhodesia

ABSTRACT The result of the 1922 referendum saw the white settlers in Southern Rhodesia vote for ‘responsible government’ rather than become the fifth province of the Union of South Africa. Prior to the granting of responsible government in September 1923, the territory had been governed by the British South Africa Company. It was the company’s arms and flag which were first used in the territory. These remained true to the prescripts of the company’s charter by reflecting its British origins and character. This nascent settler identity would evolve and consolidate around an essentially British character which highlighted allegiance to the Crown. This article shows how these, and the set of national symbols subsequently adopted by the colony, were a visible manifestation of the settlers’ ‘exceptional attachment’ to Britain and a reflection of their identity as being primarily British rather than Rhodesian.

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

Director and shareholder interactions at shareholder meetings: Compromising accountability in the service of colonialism

This research explores director and shareholder two-way face-to-face interactions at the shareholder meetings of Cecil Rhodes’s British South Africa Company, as reflected in verbatim minutes of those meetings. Shareholder meetings are traditionally viewed as being for accountability. Alternatively, directors may engage in manipulative game-playing through skillful political maneuvering of shareholders, thereby compromising accountability. The research analyzes unique data, comprising 25 full sets of verbatim meeting minutes of 29 shareholder meetings over the period 1895–1925, using manual close-reading interpretive content analysis. Our unit of analysis is the interactions between directors and supportive/approving and dissenting shareholders. Our research question is how did the directors and shareholders interact at the shareholder meetings. We develop a typology of 16 types of interactions the directors and shareholders used in their exchanges. We complement our analysis with illustrations of types of interactions extracted from our verbatim minutes. We demonstrate how powerful directors mobilized supportive/approving shareholders to quash the dissenting shareholders’ voices. Our findings have implications for how modern-day shareholder meetings are conducted.

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 Quantitative Review of Un-licensed and Off-label Medicines Use in Children Aged 0-2 Years in the Private Sector in South Africa: Extent, Challenges, and Implications.

The global lack of suitable formulations for children leads to off-label and unlicensed medicine use, posing significant risks of adverse effects. Understanding this usage on a national level can help guide interventions for better formulations. This study aimed to measure the prevalence of off-label and unlicensed medicines among children in South Africa's private sector. The study used a point prevalence methodology to review medicine use in children aged 0-2 years enrolled in a selected pharmaceutical benefit management company in South Africa from January to June 2022. A sample size of 1055 prescriptions was calculated using a 90% confidence interval, 50% prevalence rate, and 5% error margin. A systematic random sampling approach selected every seventh entry from 91,973 total entries, resulting in a final sample size of 13,139. Data included patient age, number and characteristics of medicines, quantity, and indications. Descriptive statistics analysed and reported the prevalence of unlicensed and off-label medicine use. Among the 13,139 prescribed medicines, 40% (5,246) were off-label or unlicensed, and 60% (7,893) were on-label. Of the off-label/unlicensed medicines, 16.85% (2,214) were unlicensed, and 23.08% (3,032) were off-label. Methylprednisolone was the top off-label medicine, probiotics were the top unlicensed, and the ICD10 code Z76.9 was the top diagnosis. The study found that 40% of children aged 0-2 years were prescribed unlicensed or off-label medicines in South Africa's private healthcare sector between January and June 2022. This suggests a widespread practice of off-label or unlicensed prescriptions in paediatric treatment in the South African private sector.

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

Identification of oil contamination in process water using fluorescence excitation emission matrix (FEEM) and parallel factor analysis (PARAFAC).

Fuel oil is widely used within Eskom, a power generation company in South Africa. Eskom's coal-fired power stations use up to 30,000 L of fuel oil per hour during a cold start-up, a consequence of which results in oil leaks to the dams. Oil contamination in water treatment plants causes irreversible membrane fouling, requiring costly replacement. This research work focused on the development of a rapid method for the identification of low concentrations of the water-soluble oil component fraction of crude fuel oil. For the developed method, known volumes of the water-soluble fraction of crude oil were spiked into various matrices of process water. FEEMs were collected using the patented HORIBA Aqualog spectrometer and data were modelled with PARAFAC. The results were well described with a four-component model, which included an oil component and three natural organic matter components, with a split-half validation match of 90%. The oil component was verified using linear regression of the PARAFAC component scores yielding an R2 value of 0.98. From the scores, a qualitative pass/fail test was developed such that process water can be analysed and subjected to the model to indicate the presence of oil contamination beyond a damaging threshold.

Nineteenth century audit reports: Evolution from free-form to standardised wording

The research comprises a case study focussed on the wording of 34 audit reports of the British South Africa Company (BSAC), which Cecil Rhodes established by Royal Charter to colonise Rhodesia from 1889 to 1924. The accounts were audited by Cooper Brothers & Co., now PricewaterhouseCoopers. The research analyses three audit-report characteristics that influenced audit-report wording. Of the 34 audit reports, eight contained qualified (i.e., unfavourable) audit opinions. Based on verbatim annual general meeting minutes and private correspondence, we provide evidence of the effect of the audit qualifications. The research further analyses the evolution of the audit-report wording over the period. Initially, the auditors customised the audit-report wording. Each year, they made micro changes to improve the precision of the wording. Then, in 1911, well in advance of any audit-report regulations, the wording became standardised and remained so until the end of the study period. The paper adds insights into why auditors standardised audit-report wording. We conjecture that years of struggling with customised wording prompted the auditors to adopt standardised wording. We do not know whether this decision applied just to the BSAC audit reports, or whether 1911 heralded standardised audit-report wording for all Cooper Brothers & Co. audit reports.

Analysis of private security companies compliance to the private security industry’s regulatory framework in Gauteng

This article explores some of the shortcomings of the Private Security Industry Regulatory Authority (PSIRA) in regulating and effecting control over the Private Security Industry (PSI) in South Africa. In South Africa, all Private Security companies must comply with PSIRA by registering as security providers, however this study revealed a non-compliance. This shortcoming is demonstrated by fly-by-night security companies that provide security services at shopping centres and shopping malls particularly in the parking areas who fail to comply with PSIRA in terms of registration. The main aim of this research was to analyse whether the PSCs comply with the regulatory framework as per the Private Security Industry Regulation Act 56 of 2001 in South Africa in Gauteng Province. A qualitative research design was applied to determine whether PSIRA enforces compliance as per regulatory framework and to establish whether the current private security service providers are registered with PSIRA. The population of the study involved security managers and owners of the private security companies in South Africa. The findings revealed that there is non- compliance to PSIRA by Security providers. It is recommended that the regulator be capacitated with resources to improve its compliance.

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.