South African Corporation Research Articles

A Systematic Literature Review on Transparency in Executive Remuneration Disclosures and Their Determinants

There are ongoing debates globally regarding excessive executive compensation, the perceived weak link between pay and performance, and the widening inequality gap. The South African corporate governance code King IV’s Principle 14 addresses the need for fair, responsible, and transparent remuneration. At the same time, the newly enacted Companies Amendment Act No. 16 of 2024 in South Africa emphasizes transparency in compensation, shareholder voting, and responding to shareholder feedback. This study conducts a systematic literature review of 30 articles on the transparency of executive remuneration disclosures and their determinants by analyzing Scopus-indexed articles published between 2010 and 2023, selected through specific keyword searches. The findings suggest an increasing focus on research regarding the disclosure of executive compensation, predominantly conducted in the Global North and primarily framed through agency theory. Studies exploring the factors influencing executive remuneration and the relationship between pay and performance are prevalent, with mixed results generally indicating a positive connection. Firm size emerges as a key factor in transparency, and many studies employ binary scoring to evaluate whether executive compensation disclosure is present. This paper provides valuable insights for investors, analysts, and policymakers and adds to the current understanding of executive remuneration transparency.

Intent vs Reality: Dehumanization in the South African Corporate Landscape

Thirty years after apartheid’s abolition and the ascension of a new democratic leadership, South Africa continues to grapple with the discriminatory legacy of apartheid. Measures introduced by the post-apartheid government to combat historical marginalization, including legislative initiatives like affirmative action laws and diversity management policies, encounter inherent structural barriers within South African organizations shaped by prevailing cultural norms. Despite the legal framework in place, black employees often endure dehumanizing treatment, finding themselves sidelined from decision-making channels and lacking access to avenues for career advancement and professional development. This essay aims to better understand the lived experiences of South African workplace employees through the lens of organizational dehumanization. This work underscores the urgent need to reimagine transformation efforts in South Africa, moving beyond numerical representation toward a more inclusive work environment that promotes genuine empowerment. It emphasizes the importance of developing holistic diversity management strategies, implementing effective mentorship and sponsorship programs, and providing opportunities for meaningful participation and decision-making by black employees. Such an approach will ensure that legislative intentions are translated into practical workplace realities, ultimately fostering true equality and empowerment.

Does board cultural diversity mediate the relationship between integrated reporting and corporate social responsibility? Insights from South Africa

PurposeThis study aims to explore the relationship between integrated reporting (IR) and corporate social responsibility (CSR) in the context of South Africa, specifically exploring the mediating impact of board cultural diversity on this relationship.Design/methodology/approachThis study analyzed data from 107 companies operating in South Africa between 2010 and 2022 using the quantitative research method described by Preacher and Hayes (2008).FindingsThe research findings illuminate the complex dynamics of cultural diversity on boards as mediators in integrating reporting practices and CSR initiatives. A more diverse board has been shown to mediate and strengthen the relationship between IR and CSR, leading to improved sustainability performance.Originality/valueThese findings have practical implications for various stakeholders in the South African corporate environment, including boards of directors, policymakers and investors and emphasize the importance of promoting cultural diversity to promote corporate sustainability and social responsibility. Furthermore, these findings provide insights for creating inclusive and effective boards of directors capable of leading organizations toward more responsible and sustainable practices.

Beyond ‘white monopoly capital’: Understanding race, control, and cohesion in the South African corporate elite

ABSTRACT White monopoly capital’ (WMC) has become one of the most ubiquitous terms in the South African political lexicon, bolstered by a re-energised nationalist movement. Its rise has been the occasion for a welcome debate on the changing dimensions of race, power, and control in the capitalist class. However, that debate has remained polarised between a camp that has been largely dismissive of the very possibility of a racial power bloc and one that sees it as a self-evident reality. By posing the question of whether WMC is a ‘useful’ category of analysis, this article seeks to take a more historical and empirical approach to the issue. It argues that WMC analyses implicitly overstate both the extent of white control and the extent of racial division in the elite. Yet, it argues, race still has important impacts on elite politics both within the corporate sphere and across the wider field of business. It concludes by sketching avenues of research on the politics of race, control, and cohesion in the South African elite.

Consumer objective and subjective knowledge about healthy foods: An approach to promote healthy lifestyle choices in South Africa.

Unhealthy food choices and consumption, coupled with sedentary lifestyles among consumers, intensify public health concerns regarding the quadruple disease burden, despite Primary Health Care (PHC) policy. However, the current relationship between consumer knowledge about healthy foods and following a healthy lifestyle needs to be explored. Our study, therefore, aimed to determine the association between consumers' subjective and objective knowledge about healthy foods and various healthy lifestyle choices. A cross-sectional survey was conducted among employed consumers (N = 157) from South African corporate settings. We used structural equation modelling (SEM) to determine associations between subjective and objective knowledge about healthy foods and healthy lifestyle choices. Our findings showed that most participants scored high on making healthy lifestyle choices relating to avoiding smoking (69.5%) and limiting drinking alcohol (68.7%) but less so for food and sleep (44.4%) while neglecting exercise, relaxation (13.7%), and choices that require dedicated effort (25.2%). On average, participants had high levels of subjective (mean = 3.59; 5-point Likert scale) knowledge and objective knowledge about healthy foods (88.4-95.9% correct responses). However, their objective knowledge about weight and cholesterol had severe deficiencies (36.7%). SEM confirmed an association between subjective knowledge and most healthy lifestyle choice categories, while income contributed to dedicated effort lifestyle choices. By contrast, objective knowledge did not associate with such choices. Our structural model suggests that subjective knowledge about healthy foods contributes to healthy lifestyle choices. Therefore, subjective knowledge and the objective knowledge deficiencies we identified among corporate consumers can serve as a valuable starting point for informed education to promote PHC policy and healthy lifestyle choices.

THE CLARITY OF BUSINESS MODELS IN INTEGRATED ACCOUNTING REPORTS

In this study, 664 students enrolled in accounting theory courses at both the undergraduate and postgraduate levels at the University of New England were tasked with the assignment of critically assessing the decision usefulness and understandability of 2 to 4 integrated accounting reports. A key aspect of their analysis involved a critical examination of how the accounting reports conveyed the business models employed by the respective companies. In the case of consolidated reports, students were expected to observe distinct business models for each segment of the group or identify a robust rationale if only one model was presented. A team comprising both students and faculty examined all submitted reports, coding the embedded models for their complexity and understandability. The ensuing analysis revealed three distinct clusters of models, categorized as simple, orthogonal, or spread. The decision usefulness of these models exhibited significant variation and demonstrated a clear association with their understandability. Given that South Africa is the sole country mandating integrated accounting, a distinctive expectation was formed. Reports from South African corporations were anticipated to exhibit a degree of isomorphism or clustering around a specific model to a notably greater extent than reports from other countries. However, contrary to expectations, no such clustering was identified. Furthermore, it was anticipated that students would more accurately code simple business models, given their inherent simplicity and ease of comprehension. This expectation found substantial support in the results. Finally, the study hypothesized that spread models would be more prone to being cluttered by extravagant claims, messianic declarations, and legitimation discourses compared to simple models. This hypothesis received confirmation through the study's findings.

Does board gender diversity improve environmental, social and governance disclosure? Evidence from South Africa

Purpose: This study examines the relationship between board gender diversity and environmental, social and governance (ESG) disclosure of companies listed on the Johannesburg Stock Exchange (JSE).Design/methodology/approach: Panel regressions were used to analyse an unbalanced sample of 92 companies (725 company years) listed on the JSE All Share Index during 2011 to 2021. Board gender diversity, measured as the percentage of women on a board, was regressed against aggregate and individual component Bloomberg ESG disclosure scores. ‘Critical mass theory’ was tested using a 30%+ female board representation dummy variable.Findings/results: Positive correlation is found between female board representation and both aggregate ESG and S-disclosure. This likely results from unexplained differences between company and overall economy level time effects, as no time series correlation remains between board gender diversity and ESG disclosure scores once these effects are controlled for. Little evidence is found in support of critical mass theory.Practical implications: The results, although not conclusive, provide support for the argument that greater female representation on South African corporate boards is desirable to attain higher ESG disclosure. However, both female board representation and ESG disclosure scores may be driven by the same non-modelled underlying process, likely controlled for by the fixed effects.Originality/value: This study adds to the growing ESG and board gender diversity research – specifically in South Africa, an interesting case of an emerging economy with well-developed governance and disclosure frameworks, where more equitable gender board representation and increasing ESG disclosure are topics of great practical and academic importance.

Camouflaged Compensation: Do South African Executives Increase Their Pay through Share Repurchases?

Increasingly, researchers in developed economies are associating the exponential growth in share repurchases with executives’ desire to increase company share price and thus the value of their own share-based compensation. As research on this topic in emerging economies is sparse, this paper investigates the relationship between share repurchases and executive share-based compensation in South Africa. Certain weaknesses in South African corporate governance relating to share repurchases exacerbate the risk of camouflaged rent extraction and unethical behaviour. Regression analyses were executed, using data on share repurchases and executive share-based compensation variables for listed South African companies for the period 2002–2017. Statistically significant positive relationships were identified between share repurchases and executive share-based compensation. The results support the proposition that South African executives may be repurchasing shares in a bid to increase the value of their share-based compensation (in line with the managerial power theory), rather than maximising long-term shareholder value. This paper emphasises the need for improved corporate governance relating to share repurchases in South Africa. Given the income inequality in South Africa, the findings also have social justice implications.

Authentic leadership’s influence on strategic corporate social responsibility in South Africa: mediated by participative decision-making

PurposeThe purpose of this paper is to investigate the influence of authentic leadership on strategic corporate social responsibility (CSR) in a less researched environment. This study set out to fill that gap in researching the direct influence of employees’ perceptions about the authenticity of their leaders as well as indirect effect through participative decision-making on strategic CSR which means the genuine intention to benefit society.Design/methodology/approachA quantitative research approach was followed, with an online survey to employees in large South African corporations across various industries that were mostly more than 10 years old. There were 1,417 useable questionnaires. Structural equation modelling was used to test proposed hypotheses of mediation effects.FindingsThe results revealed that authentic leadership has a significant indirect effect through participative decision-making on employees’ perceptions around strategic CSR – that is, whether their corporations are genuinely socially and environmentally responsible.Research limitations/implicationsThe data collected were cross-sectional, and survey-based in the South African corporate environment; therefore, limited generalisations can be made, and causality could not be claimed.Practical implicationsAuthentic leadership and participative decision-making are required to significantly influence employees’ perceptions about companies’ genuine interest in benefiting external stakeholders. Consistency between leaders’ words and deeds is important for employees, and therefore, companies must be socially responsible towards employees.Originality/valueThe main contribution of this research lies in showing that perception of leaders’ authenticity was enhanced when employees were allowed to participate in decision-making, which then increased positive perceptions about the organisation’s CSR focus. The study highlights similarities between authentic leadership and the African humanism philosophy of Ubuntu.

Internal communication in a diverse and developing world context: Challenges for corporate South Africa

Internal communication plays a pivotal part in an organisation’s survival. It is regarded as an investment in an organisation’s success and underpins organisational effectiveness. However, when organisations face internal communication challenges, these can threaten internal relationships, with dire consequences for the organisation. This is particularly so in the volatile, uncertain, complicated and ambiguous South African corporate context, which presents direct challenges for internal communication management. Internationally there has been an increase in studies exploring challenges for internal communication, with various authors indicating a need for further research. Our study addresses this gap by probing the internal communication challenges experienced in the South African corporate environment as a developing world view, to make recommendations for mitigating action. This exploratory qualitative interview-based study focused on the perceptions of practitioners working in large organisations, as well as consultants with acknowledged expertise in the field of internal communication. The findings confirmed that internal communication is a complex and multifaceted profession full of challenges. We identified 12 challenges, grouped into four clusters, namely access to technology, lack of formal communication training, parameters for inclusion of internal stakeholders, and management styles and structures. Contributions include recommendations for practice, together with suggestions for further research.

Corporate Governance Practices in Large and Medium-Sized Auditing Firms in South Africa

South African corporate failures and audit failures, including those of VBS Bank, Tongaat, Steinhoff and KPMG, have exposed vulnerabilities in audit quality and the role of governance failures in auditing firms. In auditing firms, good corporate governance principles are not always followed. Additionally, South Africa does not have a corporate governance code that governs auditing firms, nor is there a sector supplement to the King IV Report on Corporate Governance that applies to other industries. To identify areas for improvement in South Africa, this study aimed to ascertain the current corporate governance practices in South African auditing firms and compare them to the United Kingdom (UK) Audit Firm Governance Code. A structured questionnaire based on the UK Audit Firm Governance Code was used to collect qualitative data. Nine large and medium-sized South African auditing firms with 20 or more auditing partners made up the population. The literature study emphasised the value of good corporate governance in auditing firms, as well as the difficulties these firms encounter with corporate governance. The review also emphasised the absence of codes and standards regulating corporate governance in auditing firms. The empirical results highlighted the resultant inconsistencies in corporate governance application in South African auditing firms. Areas requiring improvement were identified in the study.

The dividend relevance pay-out model in the context of an emerging economy

Orientation: The dividend pay-out policy remains one of the key functional areas of corporate finance, more so in that it is through the receipt of dividends that shareholders can at least share in the profits of their investments.Research purpose: Because of the importance of the dividend decision (especially for emerging economies) as well as its possible link to value creation, the present study sought to providing results with recommendations on pay-out policy to improve dividend decision-making and establish a more defined link between dividends and value creation for management and shareholders alike.Motivation for the study: The endeavours of the current study lie in its contribution to the pay-out debate as it taps into a research area that has been explored minimally in emerging markets, yet it is still among the very topical functional areas of financial decisions.Research design, approach and method: The panel data of 110 Johannesburg Stock Exchange (JSE) listed sample companies for the period 2006–2018 were used. The sample was further grouped into value and growth companies. Dynamic panel estimators were used to analyse data.Main findings: The study confirmed results of similar previous research and identified further trends relating to the South African corporate setting. Specifically, the study found that companies have target pay-out ratios, which they adjust towards. Furthermore, managers are reluctant to change (increase) dividends, which may have to be cut again later, and in their endeavour to create and maximise value, they may have to sacrifice paying dividends. These trends are evident more with growth companies.Practical implications: These results mirror those of developed markets. Furthermore, the results present South African financial managers with an enhanced platform to create and maximise value for shareholders, relatively the same way as their counterparts in developed markets.Contribution/value-add: This study includes value-based variables among the explanatory variables. It is submitted that this process will enhance the endeavours of financial managers in creating values for shareholders through dividend pay-out.

Communication management research in South Africa

Since the notion of strategic communication management1had become popular inliterature and as a result of the Excellence study (Dozier, Grunig & Grunig,1995), manypractitioners and communication management departments have attempted toimplement all or some of the elements of the Excellence theory in order to change thenegative reputation of communication management research. Improving the theoreticaland practical knowledge within the communication management department is oneway of rectifying the aforementioned situation. The new knowledge base would includea far better understanding of the strategic management process as well as basic andadvanced research practices.This exploratory study is aimed at describing the nature of communication managementresearch and its function within the communication management department, as wellas the value thereof within the greater organisation. Communication managementresearch theory forms the basis of this project, while exploratory qualitative researchwas conducted within the South African corporate context in order to supplementthese theoretical perspectives.

The influence of language and culture on a South African corporate

This study investigates whether the different home languages of the employees in a SouthAfrican corporate have an influence on their perception of the organisational structureand processes. The study was conducted in the context of the ABSA financial institutionin the Western Cape.The authors conducted a series of interviews with management-level employees whospeak Afrikaans, English and Xhosa as home languages, in an attempt to ascertain theextent of the influence of individual cultures on perceptions and actions in corporatesociety. Specific attention was given to how these individuals perceived meetings,decision-making processes and conflict.These interviews were transcribed verbatim and studied by means of narrative analysisusing a specialised software package to provide better insight into the roles that languageand culture play in a South African organisation. Based on the narratives provided by therespondents in this study, the authors concluded that individual culture plays a significantrole in the perceptions of organisational structures such as conflict management,interaction during meetings, decision-making and the acceptance of authority.South Africa is now celebrating more than ten years of democracy following the country’sfirst democratic election in 1994. In the past decade, corporate South Africa has seenan unprecedented cultural diversity in its workforce. The dynamics of local organisationshave changed to incorporate the various cultural representations. In an attempt to explorethe multicultural phenomenon that exists in the workplace, the authors conducted astudy among the supervisory and managerial staff of a prominent South African financialinstitution, ABSA, in the hope of providing better insight into the roles language andculture play in a South African organisation. Such an understanding could not onlyestablish a more effective organisational culture, but also ultimately help South Africanbusiness to deal with cultural diversity and conflict in the workplace in a more creativeway. This article describes a qualitative research project utilising narrative analysis toinvestigate how employees’ home language influences their perception of corporateculture.

Who Should Be Identified as Internal Stakeholders? An Internal Communication Practitioner and Consultant Perspective in the South African Corporate Context

Healthy, mutually beneficial relationships with internal stakeholders within an organisation are crucial for its survival, for achieving long-term goals, and for ensuring value for the organisation and the stakeholders. Organisations should therefore manage internal communication strategically. However, there is no practical or academic consensus as to how to identify “internal stakeholders”, which poses challenges in the diverse South African corporate context. This qualitative study attempted to clarify how best to identify internal stakeholder groupings as recipients of communication. Semi-structured interviews were conducted with ten internal communication practitioners employed by ten of the Top 500 companies in various sectors in South Africa and with eight independent internal communication consultants in South Africa. The participants were purposively selected for their achievements, responsibilities, knowledge, and experience in corporate internal communication. We found that the traditional view of internal stakeholders as comprising employees only has become obsolete, and that the volatile South African corporate environment requires a wider range of stakeholders to be included in the organisation's internal circle. The article concludes with recommendations for future research.

SHAREHOLDERS’ INTERESTS VERSUS SOCIAL DEMANDS: INCONGRUOUS AGENDAS

In this note the chasm between shareholder and stakeholder interests in the running of the corporation in an emerging economy in general, and the third world country in particular, is considered. A study of two corporate governance models is undertaken with the intention to demonstrate that inclusive corporate governance which does not relegate stakeholder interests to the periphery is more efficient under the Two-Tier Board than the Anglo-Saxon model which is followed in South Africa. The reality of an entrenched corporate governance model which is supported in the South African Companies Act 61 of 1973 (the Anglo-Saxon model) is appreciated; hence it is argued that it is unlikely that South Africa might, in future, change to the Two-Tier board. The answer to the international revolution of realising societal expectations lies either in the King Report on Corporate Governance in South Africa (2002) (hereinafter King II) or modified corporate mindset, or both. It is also argued that the proposals in the Policy document of theDepartment of Trade and Industry (DTI) (South Africa Company Law for the 21st Century: Guidelines for Corporate Law Reform, May 2004, GN 1183 GG 26493 23-06-2004 May 2004, also available at http://www.dti.gov.za/ccrdlawreview/companylaw.htm) for optional representation of stakeholders on boards and the proposed inclusion of the statement recognising stakeholder interests in the Companies Act constitute a good start to changing the corporate mindset towards being stakeholder-sensitive. It is argued that the focus of King II on the triple-bottom line approach is negated by its ambivalence on enforcement and the status of stakeholdersin the South African corporation. The article then concludes that in a country which emerged from a history of entrenched overt racism, a significant recognition of stakeholder interests is critical to the socio-economic need for transformation to create a stable civil society. Globalisation has given rise to remarkable increase in the power of the global corporation. Events in the corporate sector can have negative repercussions not only for the shareholders of that particular corporation but also for society at large, either in that particular country or internationally. The emergence of powerful multinational corporations has led to a demise of state authority. The spate of corporate failures, however, has precipitated a move towards strengthening corporate governance rules to ensure thatcompanies are well governed. Indeed it has been opined that companies contribute enormously to the economic and social wellbeing of our societies (Worthington “Corporate Governance: Remedying and Ratifying Directors Breaches” October 2000 (116) LQR 638).

Liberalization, democratization and the remaking of the South African corporate network 1993–2020

Abstract Two broad, complementary approaches have defined the literature on interlocking directorates. Inter-organizational theories see them as an outgrowth of firms’ efforts to monitor and manage their commercial environment. Intra-class theories focus on their functionality in harmonizing and coordinating the political action of different segments of the capitalist elite. But comparative work on network formation has drawn almost exclusively on the first of these approaches—linking variation in typologies to the economic institutions that shape patterns of inter-firm engagement. Here I deploy a synthesis of inter-organizational and intra-class theories to understand the evolution of the South African corporate network over the post-Apartheid period. I trace out a broad trend of fragmentation as a hierarchical business system gave way to one modeled on Anglo-Saxon lines. But I also demonstrate the persistence of a cohesive core in the network, firstly centered around the historically dominant social bloc, and subsequently around the personal networks of politically connected black directors. The results show the potential of intra-class theories to enrich our understanding of how corporate networks form and change.

Entrepreneurial orientation, market orientation and opportunity exploitation in driving business performance: moderating effect of interfunctional coordination

Purpose The study aims to investigate the extent to which interfunctional coordination (IFC) moderates the relationship between entrepreneurial orientation (EO), market orientation (MO) and organisational opportunity exploitation (OE) and business performance (BP); second, to examine the impact of EO, MO and organisational OE on the BP. Design/methodology/approach The study used a cross-sectional design approach, with the research framework tested on a sample of 203 cases of employees mostly at skilled, professional and management levels in Gauteng Province. Data was analysed through correlation, regression and moderation analysis. Findings The results indicated that EO, MO and OE account for BP. Furthermore, IFC significantly moderates only the relationship between MO and BP (financial) and OE and BP (non-financial). While the relationship between EO and BP is not significantly moderated. Practical implications The study highlights that IFC is not yet embedded in organisational practice and culture. Scaling interventions to promote IFC as a performance enabler, particularly in conjunction with the entrepreneurial, market-oriented and OE activities, is essential in the South African corporate entrepreneurial environment. Originality/value Although EO, MO and OE are widely recognised as performance enablers, very little is known about the potential moderating role of IFC towards these identified complementary strategic capabilities within the South African corporate context. The empirical research strengthens awareness about the need and criticality of IFC in improving organisational performance in emerging economies.

“It’s a long story…” – impression management in South African corporate reporting

PurposeThe purpose of this paper is to investigate whether companies listed on the Johannesburg Stock Exchange use impression management techniques to obscure financial performance across the corporate reporting suite.Design/methodology/approachMixed-effect linear regression models were used to examine whether there is a relationship between the financial performance of a company and the length or complexity of the reports produced.FindingsConsistent with trends examined internationally, companies with lower financial performance tend to present lengthier disclosures throughout the reporting complement. However, there is limited evidence to suggest a definitive relationship between report complexity and performance. Corporate reports have maintained a consistent level of complexity and are not easily readable.Social implicationsThis paper is unique as it simultaneously considers multiple corporate reports, including the annual financial statements, integrated reports and market announcements. The paper contributes to the limited body of literature on impression management from emerging economies.Originality/valueA comparison of the complexity measures to the average education level of South Africans indicates that most corporate reports are not readable to the layman investor. Thus, despite there being no definitive relationship between complexity and performance, there is impetus to simplify corporate reporting.

Water-related sustainability reporting practices amongst South African mining and non-mining corporations

Globally, water resource management has emerged as an important research area and is acknowledged as a crucial factor in achieving sustainable development goals. Despite its significance, water-related sustainability disclosures regarding water and water-related risks among companies are alarmingly weak. Many companies are not effectively measuring, managing, and disclosing their water-related risks. Hence, this paper aims to analyze water-related reporting and disclosure requirements of a sample of ten South African mining and non-mining companies with a high water profile, listed on the JSE Socially Responsible Investment Index. The companies’ level of compliance on water disclosure was assessed based on their reporting in the integrated and or annual reports. The findings revealed that sampled five mining companies performed poorly in terms of disclosure across the frameworks of awareness, disclosure, management, and leadership. On the other hand, the selection of five non-mining companies grasped the severe effect of the water crisis on their businesses and performed better in all the framework categories. The average score for the selection of mining companies was 65% compared to the 93% for the non-mining companies. Stakeholders need to focus on water governance processes that require improvement to enable the stakeholders to make better decisions on water management; subsequently, this is an area that needs to be addressed in future research.