Background: This study tests the value relevance of interim accounting information. The study also explores whether the value relevance of annual and interim financial statements has changed over ...time.Aim: It explores whether the value relevance of interim financial statements is higher than the value relevance of annual financial statements. Finally, it investigates whether accounting information published in interim and annual financial statements has incremental value relevance.Setting: Data for the period from 1999 to 2012 were collected from a sample of non-financial companies listed on the Johannesburg Stock Exchange.Method: The Ohlson model to investigate the value relevance of accounting information was used for the study.Results: The results show that interim book value of equity is value relevant while interim earnings are not. Interim financial statements appear to have higher value relevance than annual financial statements. The value relevance of interim and annual accounting information has remained fairly constant over the sample period. Incremental comparisons provide evidence that additional book value of equity and earnings that accrue to a company between interim and annual reporting dates are value relevant.Conclusion: The study was conducted over a long sample period (1999–2012), in an era when a technology-driven economy and more timely reporting media could have had an effect on the value relevance of published accounting information. To the best of our knowledge, this is the first study to evaluate and compare the value relevance of published interim and annual financial statements.
Implementing corporate sustainability reporting as part of companies’ annual reports is a requirement in South Africa and throughout the world. The King III code strongly encourages Johannesburg ...Stock Exchange (JSE) listed companies to integrate their environmental, social and economic practices into their annual reporting. The purpose of this study was to investigate the sustainability reporting practices of three selected tourism companies listed on the JSE namely: Sun International, City Lodge and Wilderness Holdings. Three evaluation frameworks were developed from 1) the Global Reporting Initiative (GRI: G3.1); 2) the JSE: Social Responsible Investment (SRI) Index criteria; and 3) the South African National Standard for Responsible Tourism (SANS 1162) criteria. The three evaluation frameworks were used as a tool to assess the tourism companies’ annual reports. Using these frameworks provided a way of assessing the extent of sustainability reporting within annual reports and allowed for comparison across companies and years. Overall, the study provided an understanding of how the selected companies had been producing their annual reports from 2010 to 2012. The study also provided feedback on the companies’ previous reporting practices in terms of the sustainability criteria and provided information on how these companies can improve their future sustainability reporting.
Background: Prior literature established that different fair value levels disclosed in terms of the International Financial Reporting Standards (IFRS) 7 are value relevant. Setting: This study ...investigates the market pricing of the different fair value levels, as well as the market reaction towards the fair value hierarchy levels reported in terms of IFRS 7. Aim: Prior research found inconsistencies in the market pricing of fair value levels. This study seeks to contribute to this debate. It also focuses on the period after comprehensive guidance on how to measure fair value levels was issued. Methods: Data from 2009 to 2015 were collected from the financial sector companies listed on the Johannesburg Stock Exchange. The study uses the statement of financial position and the Ohlson model to investigate the market pricing of the different fair value levels disclosed in terms of IFRS 7. Results: The results of the study show that the fair value of assets level 1, 2 and 3, as well as the fair value of liabilities level 3 are value relevant while the fair value of liabilities level 1 and 2 are not value relevant. Furthermore, the market pricing of level 2 and 3 fair value assets and liabilities is not lower for companies with a high debt equity ratio than for companies with a low debt equity ratio. The results further reveal that the pricing of level 3 assets improved with the introduction of IFRS 13 and post the 2008 financial crisis. Conclusion: Fair value assets across different hierarchy levels are value relevant. On the contrary, fair value liabilities are priced differently across the different hierarchy levels.
Working capital plays a vital role in shareholders’ wealth creation, yet there is a dearth of empirical studies on the relationship between working capital management and firm value in the South ...African economic environment. This study attempts to fill this gap by using Richards and Laughlin’s (1980) Cash Conversion Cycle theory to investigate the impact of working capital management efficiency and its separate components on firm value of South African firms listed on the Johannesburg Stock Exchange (JSE). Panel data regression methodology was used to analyze accounting data obtained from I-Net Bridge/BFA McGregor for 75 firms for the 10 year period, 2003 to 2012, to determine the nexus between WCM and profitability (proxied by return on assets). The key findings of the study are as follows: 1) there exists a significant positive relationship between firm value and both inventory conversion period and receivables conversion period; 2) the relationship between the cash conversion cycle and firm value is positive but insignificant; 3) there is a significant positive relationship between accounts payable deferral period (PDP) and profitability; 4) firm size and firm value are significantly positively related, and 5) there is a significant negative relationship between leverage and firm value.
Background: The need for sustainable supply chain management has become a necessity given the growing impact of climate change and global warming. The South African (SA) government is planning to ...implement a carbon tax in the future, which will present financial challenges for organisations already facing social and environmental difficulties. Objectives: The main objective of this article was to investigate the current sustainability reporting practices in supply chains of SA organisations. The focus was specifically on the supply chain sustainability practices of organisations listed in selected sectors on the Johannesburg Stock Exchange (JSE). A secondary objective was to investigate preparation efforts by SA companies for the impending carbon tax. Method: Data collected from sustainability and integrated annual reports of organisations in the sample were analysed using non-parametric statistical tests to compare sectors on the JSE and to compare companies listed on the socially responsible investment (SRI) Index with those that are not. Results: The results showed that there is insufficient data for some of the sectors; however, there are differences in the supply chain and sustainability practices for the remaining sectors. There are also differences in these practices between SRI and non-SRI companies. The research also showed that companies are discussing important concepts relating to the implementation of the impending carbon tax. Research impact: SA organisations need to increase their focus on sustainable supply chain practices. Further investigation into the preparation efforts of companies to reduce their emissions and/or footprint and mitigate the impact of the impending carbon tax is necessary.
South Africa (SA) has pursued corporate governance reforms in the form of the 1994 and 2002 King Reports. This paper examines the association between the presence of independent non-executive ...directors (INEDs) and market valuation of a sample of 169 firms listed on the Johannesburg Stock Exchange (JSE) in SA from 2002 to 2007. Our results suggest a statistically significant and positive relationship between the presence of INEDs and firm valuation. By contrast, we find no statistically significant association between the presence of non-executive directors (NEDs) and firm valuation. Our findings are robust across a number of econometric models that control for different types of endogeneity problems, non-linear associations and firm valuation proxies. Our findings have important policy and regulatory implications. Whereas our evidence that more independent corporate boards’ impacts positively on firm valuation provides support for the recommendations of the King Reports, it shows that to be meaningful, director independence has to be more carefully and strictly defined.
This paper examined the performance of corporate South Africa in the 2012 Carbon Disclosure Project CDP. It is motivated by the growing shift to climate performance amongst the JSE listed companies ...in South Africa; hence the paper showcases the commitment of corporations in South Africa towards carbon disclosure. It thus shows exemplary commitment by corporations in an emerging economy to curb GHG emission through disclosure. The paper compared corporate South Africa carbon disclosure performance in 2012 with the 2011 disclosure performance. First, the performance of the Johannesburg Stock Exchange (JSE) 100 carbon performance leaders were examined; and using a statistical t-test of difference in means, the paper finds that the 2012 carbon performance improved remarkably over the 2011 performance; hence the T-test indicates a significant difference in means between the 2012 and 2011 carbon performance. Secondly, the paper also examined the climate performance of the JSE 100 companies and also found a significant difference between the 2011 and 2012 performance which also depicts an improvement over the 2011 climate performance. It is perceptible that the 2011 UN Climate Conference in South Africa, coupled with the SA’s outstanding role in global climate change negotiations and the Carbon Disclosure Project is driving corporate SA to ‘walk the talk’ on climate change. In conclusion the paper highlights the need for further corporate climate initiatives, and calls on governments of developing countries to take a bold stance on climate negotiations as this is a key to encouraging the corporate toward climate friendly and carbon reduction initiatives
Using weekly data collected from 20.09.2008 to 09.12.2016, this paper uses dynamic threshold adjustment models to demonstrate how the introduction of high-frequency and algorithmic trading on the ...Johannesburg Stock Exchange (JSE) has altered convergence relations between the federal fund rate and equity returns for aggregate and disaggregate South African market indices. We particularly find that for the post-crisis period, the JSE appears to operate more efficiently, in the weak-form sense, under high frequency trading platforms.
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