Browsing by Author "Mans-Kemp, Nadia"
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- ItemAssessing the business case for environmental, social and corporate governance practices in South Africa(AOSIS, 2019-11-28) Johnson, Ruth; Mans-Kemp, Nadia; Erasmus, Pierre D.Background: By focusing on sustainable financial and environmental, social and corporate governance (ESG) returns, companies and investors can do well by doing good. Despite growing interest in sustainable corporate practices, limited ESG-related research has been conducted in South Africa. Previous researchers have mainly focused on corporate governance. All three ESG aspects should, however, be addressed to ensure corporate sustainability. It is possible that the consideration of a composite ESG measure can conceal varying levels of consistency in the individual aspects. Aim: The main objective was to investigate the relationship between ESG and corporate financial performance (CFP) measures. Setting: Firms listed on the Johannesburg Stock Exchange between 2011 and 2016. A total of 66 firms were considered from six sectors. Methods: Data for the sample (359 firm-year observations) were analysed by conducting panel regressions. In line with international research, ESG was considered as the independent variable, while eight measures of CFP were individually considered as the dependent variables. Composite and individual ESG disclosure scores were obtained from Bloomberg. The respective accounting-based, market-based and value-based CFP measures were sourced from IRESS. Results: Two main trends emerged from this study. The majority of the significant relationships identified between variables were only observed: (1) once the composite ESG disclosure score was disaggregated and (2) when a distinction was made among sectors. Conclusion: The empirical evidence suggests that ESG aspects are not homogeneous across sectors. Firm leaders should hence employ a differentiated approach to address the most important risks relevant to their operating environments.
- ItemCorporate governance and the financial performance of selected Johannesburg Stock Exchange industries(Stellenbosch : Stellenbosch University, 2014-12) Mans-Kemp, Nadia; Erasmus, Petrus Daniel; Viviers, Suzette; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Business Management.ENGLISH ABSTRACT: Mainstream investors are mostly interested in how they can benefit financially from a specific investment. Although this is the case, an increasing number of so-called responsible investors are also beginning to integrate environmental, social and corporate governance (ESG) aspects into their investment analysis and ownership practices. Corporate governance compliance is often the first level of ESG interest for these investors. Previous researchers considered the relationship between corporate governance and various financial performance measures, but reported inconclusive evidence on the nature of the relationship. Even though the three King Reports provide a well-developed framework for corporate governance compliance in South Africa, no comprehensive academic study has previously been conducted on the above-mentioned relationship in the South African context. The primary objective of the current study was therefore to investigate the relationship between corporate governance and the financial performance of selected JSE industries. The chosen study period (20022010) coincided with the launch of the King II Report and included the 20072009 global financial crisis. A combination of convenience and judgement sampling was used to draw a sample from six JSE industries. In an attempt to reduce survivorship bias, the sample included both listed firms and firms that had delisted during the study period. The complete sample comprised 227 companies (1 417 annual observations). When the study commenced, there was a lack of reliable, readily available ESG data for JSE-listed firms. An existing corporate governance research instrument was therefore refined to develop standardised data on the corporate governance compliance of the selected firms. An annual corporate governance score (CGS) was compiled for each of the firms by means of content analysis of its annual reports. Five financial performance variables were considered, namely return on assets (ROA), return on equity (ROE), earnings per share (EPS), total share return (TSR) and risk-adjusted abnormal return (alpha). The selection of these measures was based on previous research. The secondary financial data were sourced from the McGregor BFA database and the Bureau for Economic Research. The resulting panel dataset was analysed by means of various descriptive and inferential analyses. The descriptive statistics revealed an overall increasing corporate governance compliance trend. Both the disclosure and acceptability dimensions of the sample companies’ CGSs improved over time. The sample firms complied with approximately 68 per cent of the corporate governance criteria on average. The panel regression analysis showed a significant positive relationship between CGS and the accounting-based EPS ratio. Although this result is encouraging, it should be kept in mind that managers can have an influence on both these variables. On the other hand, a significant negative relationship was observed between the market-based TSR measure and CGS. The TSR measure is not adjusted for risk. Risk-adjusted abnormal returns were thus also estimated for four corporate governance-sorted portfolios. In a positive change of events, both the capital asset pricing model (CAPM) and the FamaFrench three-factor estimations showed positive alphas for the portfolio consisting of firms with the highest CGSs. These encouraging results were observed for the overall study period and the period before May 2008. Investors could thus have benefitted, in risk-adjusted terms, by investing in the sample firms with high corporate governance compliance. In the period after May 2008, the FamaFrench three-factor estimations revealed that the risk-adjusted market-based performance of almost all the sample firms were negatively affected by the global financial crisis of the late 2000s. The reported alphas for this period were, however, not significant. Based on these results, the researcher recommends that directors, managers and shareholders should consider the valuable opportunities associated with sound corporate governance compliance, rather than merely regarding it as a “tick-box” obligation.
- ItemInvestigating director development in South Africa(AOSIS, 2018) Mans-Kemp, Nadia; Viviers, Suzette; Staal, Blanche-Mari; Van Schalkwyk, JurieOrientation: To effectively fulfil their multiple roles, the four King Reports suggest several development mechanisms for newly appointed and seasoned directors. Research purpose: This study investigated the most prominent King III director development initiatives used by the Johannesburg Stock Exchange (JSE) Top 40 companies over the period 2011–2015. Motivation for the study: Despite the emphasis on director development in the King Reports, there is a paucity of academic research on the topic. The authors hence evaluated corporate reporting on and the application of selected director development mechanisms. Research design, approach and method: A mixed-methods approach was adopted. Key words were used to conduct content analysis on the companies’ integrated reports. Disclosure and depth scores were constructed to evaluate reporting trends. To gain further insight into these trends, semi-structured personal interviews were conducted with directors who had varying levels of experience. Main findings: The majority of the JSE Top 40 companies disclosed some details regarding the director development initiatives they used. The key word analysis revealed that most companies focused their development efforts on new board appointees. The interviewees emphasised that the entire directorate should be continuously developed. Participants indicated that mentoring is an important informal development mechanism. In line with literature, they stressed that all directors should take personal responsibility for their development. Contribution/value-add: This study emphasises the importance of continuous director development beyond the orientation of new board appointees. A well-developed board is in a better position to fulfil its responsibilities to shareholders and other key stakeholders than a less developed one.
- ItemInvestigating the moderating effect of student engagement on academic performance(SUN MeDIA, 2013-12-20) Gerber, Charlene; Mans-Kemp, Nadia; Schlechter, AntonThe academic performance and success of students are important for both higher education institutions and students. Student engagement has been identified as a crucial factor in academic success. Studies investigating student engagement have typically used self-report measures of engagement, collected at a given point in time. Self-report measures are, however, prone to positive bias (social desirability). In an attempt to overcome these shortfalls, data were collected over three years (2010-2012) in a third-year Business Management module, presented at a South African university (n=380). Academic and behavioural student engagement was measured by assessing academic activities (class attendance and weekly homework assessments), rather than with a self-report measurement scale. Unlike previous studies that correlated student engagement with academic performance, this article argues that student engagement enhances academic performance. It was found that student engagement significantly moderated the relationship between early and late semester assessments of academic performance (semester test and examination marks). It was, therefore, concluded that higher levels of engagement enhance the learning experience and subsequent performance in the module. High levels of student engagement may even lead to higher, than would otherwise be expected, academic performance.
- ItemLinking integrated reporting quality with sustainability performance and financial performance in South Africa(AOSIS, 2020-08) Mans-Kemp, Nadia; Van der Lugt, Cornelis T.Background: Ten years have lapsed since the launch of the International Integrated Reporting Council. Stakeholders increasingly question whether integrated reporting (IR) meets the objectives of decision-usefulness and accountability. Aim: The primary objective of this study was to assess the usefulness of IR by examining the interrelations between the integrated reporting quality (IRQ), sustainability performance and financial performance of listed companies in South Africa. Setting: The study is conducted in the country where integrated reporting is most established. The links between the IRQ of the Top 100 companies listed on Johannesburg Stock Exchange and their environmental, social and corporate governance (ESG) scores and multiple financial indicators are investigated over the period 2013 to 2018. Method: The EY Excellence in Integrated Reporting Awards was used as a metric to determine the sample companies’ IRQ. These awards were ranked according to four categories, namely ‘progress to be made’, ‘average’, ‘good’ and ‘excellent’. Sustainability (ESG scores) as well as financial performance data (accounting-based and market-based variables) were sourced from Bloomberg. The panel dataset was analysed by conducting a mixed-model analysis of variance and panel regressions. Results: A high level of IRQ was found to be significantly associated with high levels of environmental, social and corporate governance performance, as well as high earnings per share and high leverage. Conclusion: IR appears to strengthen managerial efficiency and legitimacy in the eyes of debt capital providers in South Africa, while equity capital providers do not provide a clear signal of approval.
- ItemMechanisms to promote board gender diversity in South Africa(AOSIS, 2017-09-15) Viviers, Suzette; Mans-Kemp, Nadia; Fawcett, RebeccaResearch purpose: Board gender diversity is gaining increasing attention globally and in South Africa. Although more women are serving on the boards of companies listed on the Johannesburg Stock Exchange (JSE), they only represent approximately one-fifth of all directors. This situation mirrors international trends. A review of the extant literature revealed three prominent mechanisms to increase the appointment of female directors, namely mandatory board gender quotas, voluntary targets and shareholder activism. The authors critically evaluated these three mechanisms with the aim of suggesting the most appropriate ones in the South African context. Motivation for the study: The study was undertaken given the paucity of comparative research on the three change mechanisms and the need to promote greater board gender diversity in South Africa. Research design: Judgement and snowball sampling were used to identify a sample of experienced local asset managers. Semi-structured personal interviews were conducted to gauge these individuals’ views on the applicability of these change mechanisms in South Africa. The qualitative data were analysed using thematic analysis. Key findings: Although the participants acknowledged the importance of board gender female board representation, none of them have engaged investee companies on the topic over the period 2011–2016. This study provides evidence that legislation is the least preferred mechanism to promote board gender diversity in South Africa. Voluntary targets and public pressure from shareholders might be more effective. Contribution: Whereas existing research mainly centres on the rationale for board gender diversity, this study goes a step further by investigating three prominent mechanisms to promote female board representation. A contribution is made to the body of knowledge on diversity management. Context-specific recommendations are offered.
- ItemPublic 'say on pay' activism in South Africa : Targets, challengers, themes and impact(AOSIS, 2019-10-22) Viviers, Suzette; Mans-Kemp, Nadia; Kallis, Linda; Mckenzie, KristenBackground: Shareholders and other stakeholders in South Africa are increasingly raising their concerns in public about seemingly excessive executive remuneration. Most of their criticism is rooted in the large and growing wage gap in the country. Aim: The authors investigated the nature of the entities whose executive remuneration policies and practices were publicly criticised, the types of challengers involved in this social movement, key issues raised and the impact that the challengers had on the targeted executives’ remuneration. Setting: Public activism involving five South African state-owned enterprises and 38 companies listed on the Johannesburg Stock Exchange. Methods: Executives and entities that were targeted in public were identified from three online financial newspapers published between 01 January 2010 and 31 December 2016. A total of 92 events were recorded involving 65 executives. Data on these executives’ emolument and three control variables were sourced from Bloomberg. Descriptive statistics and mixedmodel analysis of variance tests were employed to evaluate the quantitative secondary data. Results: In line with the extant literature, most of the targets were large, well-known companies. Individual and minority shareholders represented the largest category of challengers, followed by asset managers and trade unions. The vast majority of concerns centred on the size and composition of executives’ packages and insufficient justifications provided by remuneration committees. The total pay, bonuses and other performance-based incentives decreased significantly in the year after the companies were publicly targeted. Conclusion: The findings suggest that public ‘say on pay’ activism can be an effective mechanism in addressing seemingly excessive executive emolument.
- ItemReflecting on corporate governance in South Africa : lessons learned and the way forward(Unisa Press, 2020-12) Van Zyl, Marilee; Mans-Kemp, NadiaBackground: South Africa is a corporate governance pioneer. The King Reports have offered guidance to listed companies in the country since 1994 and unlisted entities since 2016. In the drive for corporate change, attention is increasingly placed on the role of activist shareholders, in particular institutional investors, given the size of their investments. Purpose/objectives: This study aimed to gauge institutional investors’ views on the differences between the King III and IV Reports related to positive aspects and room for improvement. Design/methodology/approach: Semi-structured interviews were conducted with selected institutional investors. Themes were then derived by conducting an interpretive thematic analysis. Findings: Interviewees commended the format and scope of the latest King Report but suggested that outcomes-based training should be offered to directors to ease implementation. Executive remuneration, director independence and auditor independence were highlighted as areas that require attention. Some interviewees questioned whether the current non-binding vote on executive remuneration is sufficient. They suggested that executive remuneration should be tied to performance outcomes across the triple bottom line. Participants recommended that director independence should be considered on a case-by-case basis, instead of strictly applying King IV’s suggested tenure guideline. Furthermore, mandatory audit firm rotation could enhance auditor independence, and hence transparency. Stakeholders are encouraged to demand enhanced transparency on corporate matters to enable more informed decision-making.