1,721,025 research outputs found
The impact of integrated reporting on cost of capital and analysts’ forecasts: a study of Johannesburg Stock Exchange (JSE) listed mining firms.
Full text linkMasters Degree. University of KwaZulu-Natal, Durban.Integrated reporting has gained traction in the reporting space and research literature since
December 2013, when the International Integrated Reporting Council issued an integrated reporting framework. However, there is a lack of evidence on the benefits associated with integrated reporting. This study examined its effect on the cost of equity capital, and analysts’ forecast errors. Empirical studies on voluntary disclosures and integrated reporting suggest a negative relationship between high quality disclosures and the cost of equity. The study employed a panel regression analysis to investigate the association between integrated reporting scores, the cost of equity capital and analysts’ forecast errors.
The sample comprised mining firms listed on the Johannesburg Stock Exchange from 2013 to 2018. The results highlight an insignificant inverse relationship between integrated reporting and the cost of equity capital, and analysts’ forecast errors. Although not significant, they suggest that improvements in the quality of integrated reporting could contribute to reducing the cost of equity capital and improving financial analysts’ estimates by providing relevant information. The results shed some light on the financial benefits associated with the adoption of integrated reporting. Essentially, there is some evidence that the capital market rewards firms who produce integrated reports aligned with the International Integrated Reporting Framework
Significance of infrastructure investments in emerging markets to institutional investors.
Full text linkDoctoral Degree. University of KwaZulu-Natal, Durban.The worldwide financial crisis of 2007/8 and the subsequent economic slump led to significant funding and solvency challenges for institutional investors as their financial positions were adversely affected. The former institutional investors’ investment ‘safe haven’, being real property/estate, was one of the catalysts for the 2007/8 crisis as the real estate market experienced substantial losses. These experiences altered institutional investors’ perceptions towards their traditional asset and portfolio allocation strategies. In an attempt to avoid poor returns and excessive volatility from real estate, bonds and money market instruments, institutional investors are now in a new drive to diversify and supplement their core assets. As a result, institutional (and individual) investors are on the hunt for better yields, diversified portfolios, and inflation hedged returns so that they can meet their long term inflation-indexed liabilities and remain afloat.
Infrastructure sector investments, given their theoretical narratives and attractive investment characteristics qualify to be the new investment niche and appropriate for long term institutional investors. This claim to the attractiveness of infrastructure investments can be rejected or shelved if empirical analysis of infrastructure investment features yields contrary results as the attractive risk-return profile of infrastructure investments might be ‘illusory’. The illusion is amplified by the differences in infrastructure investments in developing and developed markets. This thesis evaluated the economic or financial intrinsic infrastructure investment features to ascertain if institutional investors (in their hunt for new investment avenues), can derive value from the same in emerging markets where the infrastructure gap is high and the infrastructure market still developing. Academic studies on infrastructure investments in emerging and developed markets are scant. The few available academic studies applied very basic statistical measures on the subject matter. The present study adopted, portfolio optimization approach, risk-adjusted return measures, linear and non-linear autoregressive distributed lag (ARDL) models, panel ARDL as well as EGARCH and GJR-GARCH models to achieve the set objectives. As such, the study makes notable contributions to the body of knowledge by applying appropriate econometric models using emerging nations as a case. The results indicated that unlisted or private infrastructure securities can amplify portfolio returns and dampen portfolio risk. The significance of infrastructure investment to institutional investors is thus limited to enhancing portfolio returns and reducing portfolio risk. The results showed that listed or exchange traded infrastructure’s risk-return profile is similar to that of real property and general emerging equity market returns in emerging markets. Private and listed infrastructure exhibited different stochastic and distributional features implying that they can play a complementary role in a portfolio. This implies that investors can hold listed and private infrastructure in the same portfolio without sacrificing portfolio performance.
Listed infrastructure exhibited remote inflation hedging ability on short term basis. All other assets are poor inflation hedges in emerging markets implying that investors must consider other assets which can hedge inflation risk. All the assets under consideration exhibited significant volatility clustering, volatility persistence and leverage effects. GJR-GARCH specification under GED proved to be the optimal volatility model for all assets under study. This implies that corporates in the infrastructure sector (as well as real property and general equity) in developing economies should be prepared to absorb an additional risk premium as lenders are exposed to significant volatility persistence. On the same note, investors should also come up with other sources of liquidity as volatility persistence will increase the cost of providing liquidity in emerging markets. Investors are recommended to allocate a significant part of their capital to unlisted infrastructure so that they can enhance their portfolio performance and reduce portfolio diversifiable risk. In order to hedge inflation risk, investors are recommended to look beyond infrastructure, real property and the general equity market in emerging markets. Policy makers in emerging companies are recommended to design contracts and concessions which link returns from long term infrastructure returns to inflation rate. On the same note, regulators in emerging financial markets are recommended to come up with policies which dampen the volatility of asset prices which in turn restore investor confidence, thereby attracting long term capital. Investors are encouraged to consider leverage effects when computing their value-at-risk figures and when making investing decisions. Researchers are encouraged to unbundle the infrastructure sector, and emerging markets ‘groups’ when making future studies. On the same note, as data become available and the economic environment changes, inflation hedging capabilities of the assets covered in this study can be evaluated on a longer term basis in different inflation environments
The transparency of carbon emissions disclosure within the South African public sector.
No full textMasters Degree. University of KwaZulu-Natal, Durban.The study addressed how the South African public sector discloses its carbon emissions and determines whether the disclosures were transparent. It also determined applicable legislation, regulations and frameworks that govern carbon emission within the South African public sector. Reporting on environmental, social and governance (ESG) of (carbon emissions is part of ESG) is a new concept for both the private and public sectors and is mostly regarded as secondary to traditional financial reporting. Reporting on ESG is currently not a mandatory requirement. Thus, when some entities attempt to report on it, it is not afforded adequate attention by both preparers and those who provide assurance on these reports. Legislation, regulations, and codes like the King IV and other forms of frameworks exist to guide the governance carbon emission disclosure. The disclosure requirements required by the department responsible for monitoring carbon emission are basic and regarded as level 1 as per the international standards. This legislative requirement resulted in departments, metros and entities adopting integrated reporting as their reporting framework despite its preclusion of the departments. Furthermore, the Accounting Standards Board (ASB) concentrates on traditional financial reporting and neglects ESG reporting. The ASB recently issued an exposure draft on sustainability for comments and discussion. The exposure draft still has to undergo a lengthy consultation process; thus, it will not be used until, at least the 2026/27 financial year. A quantitative research methodology was applied in this study. The study sampled 21 public sector metros, departments, and entities and assessed their carbon emission disclosure. The disclosure was contained in the integrated/annual reports prepared by the selected metros, departments, and entities.
There were pockets of excellence when these were assessed on individual level, like Eskom and City of Cape Town followed by the aviation industry entities like South African Airways and SA Express. City of Cape Town and Eskom can be used as examples of how carbon emissions disclosure can be transparent. The overall quality of the South African public sector carbon emission disclosure in the respective financial reports was gauged against adopted transparency indexes and covered the following areas: assurance of reports, density of reports, management orientation, reporting strategy, integration of carbon emissions reporting, readability, attributes, and repetition within the reports. The overall carbon emission disclosures by public sector entities, departments, and metros were found to be below par. Therefore, both null hypotheses of this study are not supported as the disclosures of carbon emissions in the South African public sector are not transparent. The South African public sector lags behind the country`s private sector, and this has a potential of having a negative impact on future funding needed by the public sector. International and local banks
have moved to green funding. Either funding will come at higher costs, or it will be difficult to source for the South African public sector. This might also affect the private sector as well, as the international funders will review the entire country and not just pockets of excellence here and there. South African exports might be penalised by trading the country`s partners in Europe because of carbon tax issues, as the country`s carbon disclosures are deemed to be not transparent
Financial risk management and bank profitability in South African banks.
Full text linkMasters Degree. University of KwaZulu-Natal, Durban.This study examined the connection between financial risk management and banks’ profitability in a South African context. The relationship was segmented into three major financial risks; credit risk, liquidity risk and market risk. Theory assumes risk to have a negative relationship with profitability; however, some studies have proved otherwise. This study used top five banks in South Africa over a10-year period spanning 2006 to 2015 and employed Fixed Effect Model based on the Hausman Test to estimate the relationship between credit, liquidity and market risk with profitability measure return on equity. “The credit risk indicators (independent variables) employed in this study are non-performing loans to total loans, and loans and advances to total deposit. Two control variables leverage ratio and logarithm of total asset as proxy for firm size were also used. All variables were regressed against ROE as a profitability measure (dependent variable). The findings indicate a significant relationship between profitability and non-performing loans, and leverage ratio at 1%, loans and advances to total deposit at 5%; while firm size (log total assets) is significant at 10% significance level. The liquidity risk indicators (independent variables) employed are loans and advances to total deposit, non-performing loans to total loans, LOG(total assets), market capitalisation to total assets, non-deposit dependence/external finance, equity to total assets. Control variables are non-performing loans, firm size (log total assets), GDP growth rate, and ratio of financing gap. The findings indicate that loans and advances to total deposit, non-performing loans, market capitalisation to total assets, and non-deposit dependence are significant at 1% significance level, firm size (log total assets), at 5% ; while equity to total assets, GDP growth and ratio of financing gap are insignificant.
The market risk indicators (independent variables) employed with three main variables are market capitalisation (log stock) to proxy equity risk, exchange rate to proxy foreign exchange risk, and lending interest rate to proxy interest rate risk. Three control variables were employed; inflation rate, GDP and monetary supply (M3). The findings show market capitalisation (log stock) is significant at 1%, exchange rate and GDP are significant at 10% significance level. An insignificant and negative relationship with lending interest rate was found. With the control variables, the findings showed that there is an insignificant and positive relationship between inflation rate and return on equity and a negative relationship between GDP and return on equity. The results are in conflict with the expected sign. The study suggests that, with regards to credit risk, banks in South Africa should enhance their capacity in credit analysis and loan administration while the regulatory authorities should pay more attention to banks’ compliance to relevant regulatory requirements by the Basel Committee on Banking Supervision, put more effort in attracting deposits as they are a major determinant of liquidity followed by external funding liability and seek for effective hedging strategies to deal with the market risk volatilities
An analysis of transformation initiatives to promote development: a case study of uMhlathuze Local Municipality.
Full text linkMasters Degree. University of KwaZulu-Natal, Durban.With the advent of democracy in 1994, the South African government made a commitment to deliver services to all citizens irrespective of race. To achieve this objective, service delivery was decentralized to local government. However, the wave of service delivery protests in South Africa raises questions around the successful implementation of this strategy. The journey to transform the South African local government system has not been an easy one. While the vision set out in the Constitution (1996) is clear, implementation is confronted by significant challenges. Scholars present conflicting results on decentralization. Some contend that decentralization resulted in substantial achievements in some regions and countries, but partial developmens with less positive impacts in others.
The study sought to investigate the effects and impact of decentralization on governance, closely examining community participating in budgetary and policy-making activities. It further sought to establish if there is any correlation between audit outcomes and service delivery using the uMhlathuze Local Municipality as a case study. Finally, the study sought to establish factors that drive/impede the implementation of transformation initiatives. To realize the objectives of the study, the researcher utilized decentralization model as a lens to investigate whether governance practices are effective in improving service delivery through responsive, accountable, and efficient democratic participatory local government.
For purposes of this study, the researcher adopted a quantitative research approach because of its objectivity and its ability to draw inferences. The researcher utilised purposive and convenience sampling. Convenience sampling was utilized to identify key informants. The results are presented using the Statistical Package for the Social Sciences (SPSS) version 25. The SPSS analysis made it possible to formulate propositions.
The study found that participatory democracy is present within the uMhlathuze Local Municipality but has not spread across all the areas within the municipality’s jurisdiction. Most of the study participants were of the view that the Municipality consults through ward councillors and/or headmen (izinduna), suggesting that ward committees are active. However, some areas still lack adequate services, especially peri-urban and rural areas. Party-political conflict is said to be the cause for concern.
The study participants felt strongly that audit outcomes have a positive correlation with the service delivery and the quality thereof. In the last five financial year periods, the uMhlathuze Local Municipality has received clean audit opinions consecutively. At the same period, the municipality is reported to have achieved great strides in service delivery. These findings raise some doubt of the authenticity of the claims that local government is over-legislated, thus resulting in municipalities spending more time complying with the law than delivering services.
It is however, concluded that participatory democracy in the local government is witnessed mostly during the run-up to elections, during budget and IDP processes. Endemic corruption, inadequate community participation, and undue political interference in local government are some of the reasons for the failure to implement good governance through decentralization
Financial capability, financial socialisation and professional skills of Accounting students studying in KwaZulu-Natal universities.
Full text linkDoctoral Degree. University of KwaZulu-Natal, Durban.The global discourse on financial capability and financial socialisation has gained momentum in recent times. Professional skills gradually become an issue that prospective employers say most graduates are missing. This has aroused policymakers and academics’ interest in the importance of financial capability, financial socialization and professional skills in maintaining economic and financial stability. The global financial crisis of 2007/2008 was a consequence of the lack of such capability. At local and international level, much attention has been paid to financial capability and little has been done on financial socialisation and professional skills, especially when it comes to financial decision making and related skills. Both young and old have been affected by poor financial decision making which has negatively affected the economy. What further complicates the poor financial decision making is the fact that there is also bad influence coming from external sources and lack of requisite skills for sustainability.
However, it remains unclear whether university students enrolled in financially related courses, particularly accounting students in the KwaZulu-Natal Province of South Africa, have higher financial capability levels as measured by financial knowledge, financial attitudes, numeracy skills and financial behaviour. It also remains an unknown factor whether what role external factors play in financial decision measure by parental influence, peer influence and social media play a critical role in the financial decision making.
It is also not known whether students studying for accounting degrees in professionally accredited institutions are more financially capable than their counterparts in non-accredited institutions. Finally, there is a lack of clarity on whether financial knowledge, numerical skills, financial attitudes and financial behaviour as components of financial capability can be influenced by financial socialisation.
This study was motivated by the existence of these grey areas in the current literature. It aimed to provide empirical evidence on these issues that will inform curriculum development and policy formulation on financial literacy matters in South Africa.
Self-administered questionnaires were utilised to collect primary data from undergraduate accounting students studying at the University of KwaZulu-Natal (UKZN), Mangosuthu University of Technology (MUT) and Durban University of Technology (DUT). The Statistical Package for the Social Sciences (SPSS 25) was used to analyse the data. Descriptive statistics, Bivariate regression analysis and One-way Analysis of Variance (ANOVA) were employed to investigate the financial capability of accounting students and confirmatory and exploratory factor analysis was used to identify the factors that influence such capability. Cross Tabulation and Regression analysis were used to ascertain the relationship between level of study and financial capability and factor analysis was employed to determine the factors that influence the accounting students’ financial capability, financial socialisation and professional skills. Regression analysis was also used to evaluate the difference in professional skills and financial capability between UKZN (SAICA accredited) and DUT and MUT (non-SAICA accredited). Finally, Chi-square was employed to establish the relationship among the financial capability, financial socialisation and professional skills of accounting students.
The results revealed that more of the respondents were female than male. The overall analysis of the financial capability of the accounting students indicated that most of the respondents (n=1416; 89.5%) have high financial capability. However, only (n=229; 14.5%) were found to have high levels of financial knowledge. With (n=1513; 95.6%), (n=1286; 81.3%), and (n=1394; 88.1%), it was found that most of the respondents have positive financial attitudes, good financial behaviour, and high numeracy skills, respectively. The computations in relation to financial socialisation and professional skills showed that most of the respondents are not influenced by social media, while most have excellent professional skills, with (n=1149; 72.6%) and (n=1506; 95.2%), respectively.
The financial capability of the accounting students is high compared to the results of previous studies conducted among the general population. However, the results for financial knowledge (a component of financial capability) are low, which is consistent with the findings of other studies. The finding that financial attitudes, financial behaviour and numeracy skills significantly influence financial capability is a unique feature of this study, as it has not been reported in the literature reviewed. As expected, the numeracy skills of the accounting students were high compared to previous research. Nonetheless, much remains to be done to improve the financial knowledge of students in general and accounting students in particular
Style investing and information conveyed by past returns in South Africa : an empirical analysis.
Full text linkMaster of Commerce in Finance. University of KwaZulu-Natal. Durban, 2015.The aim of this study was to establish the long-run relationship between six selected South African indices (i.e., large cap, small cap, resources, value, growth and industrials). Long-run relationships were analyzed in relation to mutual funds’ style drift in an attempt to view the underlying diversification opportunities and potential risk faced by investors. The Engle-Granger two-step procedure and asset class factor models were used to encounter this territory. Using daily and weekly closing prices from 2006 to 2014 the results from the Engle-Granger two-step procedure show that there are drastic changes in long-run relationships between the six selected indices when broken into two year periods. In addition, the results reveal that a vast number of long-run relationships were established during the 2007 global financial crisis which indicates low diversification strategies during that period. The study captured a consistent, growing long-run relationship between three pairs of indices when the roll-over strategy was implemented. These pairs are small caps/ industrials, small caps/ large caps and small caps /value.
The results from the asset class factor model show that there were two apparent style drifts and abundant stock picking in the period covered. However, the reported stock picking does not harm diversification properties since managers ensure that their moves are against binding long-run relationships. Furthermore, the results from the asset class factor model reveal that fund managers tend to follow one another’s moves. This is solid proof and confirmation of herding behaviour among fund managers. South African growth and value indices show complementary relationships when the literature pronounces them as substitutes. The literature declares them to be the opposite of each other. This study found that the growth and value indices possess strong positive linear relationships which are in contrast to what is documented in the literature.
Changes in long-run relationships and dispersed asset allocations have direct implications for investors’ opportunities for diversification. Since positive long-run relationships erode diversifying properties, it is important to continue checking the long-run relationships between indices before investing as they are prone to drastic change in a short period of time, i.e., as little as two years
Influence of the performance of Black Economic Empowerment shares on the Johannesburg Stock Exchange Top 40.
Full text linkMasters Degree. University of KwaZulu-Natal, Durban.The study investigated the performance of Black Economic Empowerment (BEE) shares on
the Johannesburg Stock Exchange (JSE). It employed data from 48 firms active on the JSE
from 2003 to 2016. Unbalanced panel data was used as there were firms with no data for this
period and they were omitted from the study when they were no longer part of the JSE Top 40.
The fixed effects model results showed that BEE shares’ influence on share returns is
insignificant, but that they do have an impact on firm value. It was found that when a BEE
share is issued, the firm’s value increases by 0.522 when return on equity (ROE) is used and
0.45 when return on assets (ROA) is employed. A bootstrap technique was run on the fixed
effects model in order to account for cross-sectional dependency. The bootstrap did not affect
the outcome of the effect of BEE shares on share returns. However, the influence of BEE shares
on the firm’s value became significant. These results are consistent with the existing literature
which states that firms issue BEE shares in order to reap other benefits. Although BEE shares
have no influence on share returns and firm value, it is recommended that firms continue to
issue such shares in order to receive a higher BEE rating
Financial literacy among small and medium enterprises in Zimbabwe.
Full text linkDoctoral Degree. University of KwaZulu-Natal, Durban.Global concerns about financial literacy have heightened following the 2007/8 global financial crisis where it became apparent that lack of financial literacy was one of factors that contributed to the detrimental financial decisions taken. There is global recognition that poor financial decisions have a harmful overspill impact on financial and economic stability. In light of the importance of financial literacy in all economies, this study was conducted to ascertain the level of financial literacy among Small and Medium Enterprises (SMEs) in Zimbabwe that are key contributors to economic growth. The study was motivated by the need to develop a comprehensive financial literacy strategy which, if implemented, would enable business players to operate in the current financial landscape characterised by an influx of complex financial products. This research sought to relate financial literacy to financial product awareness and utilization and describe the financial behaviour of SMEs and their patterns of debt management. While governments across the world have expressed concern about the financial literacy levels of different population cohorts and have launched financial education programmes, Zimbabwe is lagging behind. Despite numerous initiatives by the government to support SMEs, business growth remains subdued, the sector remains financially excluded and many businesses fail within the first five years of operation. Research indicates that business failure is a result of poor financial management, hence it became necessary to establish the level of financial literacy of SMEs so that a comprehensive financial literacy strategy could be developed to address the phenomenon. A quantitative cross sectional research design was employed, with data collected by means of a questionnaire administered to a sample of 384 SMEs in Harare and Bindura district. The study‟s findings revealed that financial knowledge was low, notably among the young and aged, those who are single, separated or divorced and, surprisingly, those with more business experience. Significant differences were noted across age groups, business sectors and years of experience in business. Although SMES exhibited positive and somewhat positive financial behaviour, a correlation analysis between financial literacy and financial behaviour revealed a weak positive relationship, calling for the need to seek strategies to address financial literacy. The study also established that SMEs are not aware of many financial products, nor do they utilize them. An association between financial knowledge and financial product awareness was noted, with those with high financial knowledge being aware of many financial products. However, no association was noted between financial knowledge levels and financial product utilization. Regarding debt behaviour, the research established that SMEs were not comfortable with their debt positions but because they were aware of the consequences of default, they made sure they met their financial obligations on time. In times of financial distress, friends and relatives were the main sources of funding and loans were beginning to gain popularity due to the increase in the number of micro finance institutions. On the whole, the research concluded that there is low financial literacy and low utilization of financial products among SMEs, but positive debt behaviour. The study recommended the introduction of financial education for SMEs and the development of the curriculum thereof, the increase in awareness campaigns, and an increase in access to information on financial products and services by the SMEs
A cost benefit analysis of forestry seed orchard establishment in Sappi Forests, South Africa.
Full text linkMaster’s Degree. University of KwaZulu-Natal, Durban.Forest tree seed produced in specialised seed orchards is the primary source of reproductive material for plantation forest regeneration in South Africa. Forestry seed orchards consist of stands of genetically superior trees planted together under management that encourages flowering and cross pollination. Their primary objective is to produce abundant genetically improved seed for sowing. Sappi has produced seed from its own seed orchards since 1995. In this study the costs and benefits of new and existing seed production orchards for Sappi Forests was examined from an economic perspective in the South African plantation forestry context. The impact of nursery seed use efficiency on seed orchard economic feasibility was also examined. Data regarding seedling production, seed orchards and plantations across Sappi’s land holdings in KwaZulu-Natal and Mpumalanga were collected from multiple Sappi Forests databases including their Forest Management System, Timber Management System and Sappi Nursery databases. Analysis was undertaken to evaluate the net present values (NPV) of benefits, costs and benefit cost ratios (BCRs) associated with the seed orchard programme versus the use of unimproved planting material. Projected revenue increases from increased timber production were assessed. A number of discount rates typically used in South African forestry economic analyses were evaluated. Findings indicated that BCRs were >1 for both current and future proposed seed orchards, with the seed programme overall having a NPV of over half a billion rand, a BCR of 20 and an IRR of 62.5% at a 6% interest rate. A proposed new orchard had a NPV of R 175 million. It was found that increases in seed use efficiency could lead to increased timber production worth R 2 – 8 million per year under various scenarios. This research concurs with similar studies on the subject that establishment of seed orchards is an excellent investment for forestry managers. Based on this research, it is recommended that new seed orchards be pursued where selections of higher genetic gain than those in current seed orchards are available, and demand for the species is over a large land area. Further, nursery improvements that lead to increased seed use efficiency can be motivated based on increased timber production when there are limited quantities of the highest value seed
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