SUNScholar - Browsing by Author "Smit, E. v d M."

Browsing by Author "Smit, E. v d M."

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Are some fund managers better than others? Manager characteristics and fund performance
(AOSIS, 2004) Friis, L. B.; Smit, E. v d M.
The research objective has been to find out whether fund manager characteristics help explain fund performance and propensity to risk taking. Eight independent variables; manager age, tenure of the manager with the fund, years of education, whether the manager holds a MBA or CA/CFA qualification, management team size, fund age and fund objective are regressed on measures of fund performance and riskiness. The findings of the study are highly significant and show that fund performance and riskiness are impacted upon by managers’ qualifications. One can expect better risk-adjusted performance from a fund manager who holds a CA/CFA qualification. Results show that these managers outperform managers without these qualifications, while taking on less risk than managers with MBA qualifications.
Corporate entrepreneurship and financial performance : the role of management
(AOSIS, 2002) Goosen, G. J.; De Coning, T. J.; Smit, E. v d M.
It is hypothesised that a positive relationship exists between the financial performance of an organisation and the level of intrapreneurship within the organisation with causation running from entrepreneurship to financial outcomes. Using a three-factor key intrapreneurship model developed by Goosen, De Coning and Smit (2002) and financial outcomes from a sample of companies listed in the industrial sector of the Johannesburg Stock Exchange, this proposition is put to the test. The results support the hypothesis that the key factors innovativeness, proactiveness and management’s internal influence all significantly contribute to financial performance if regarded individually, but that the last factor dominates the first two external factors when used simultaneously. The conclusion underscores the importance of the impact of leadership on financial outcomes.
The danger of high growth combined with a large non-cash working capital base - a descriptive analysis
(AOSIS, 2002) Steyn, B. W.; Hamman, W. D.; Smit, E. v d M.
A high growth rate may not be the ultimate measure of a successful company. This article shows that growth at too high a rate, for a company with a high non-cash working capital component, may lead to financial difficulties. While the income statement of a company is based on the accrual of income and expenses, the cash flow statement is based on the receipt and payment of cash. A company experiencing high sales growth, depending on the extent of its non-cash working capital, will find that the cash flow from operating activities before the payment of dividends will not grow as quickly as the net profit after taxation. This is because the accrual part included in the net profit after taxation is also growing at a high rate. At such a growth rate, operating activities do not generate sufficient cash to sustain the day-to-day activities of the company.
The development of a factor based instrument to measure corporate entrepreneurship : a South African perspective
(AOSIS, 2002) Goosen, C. J.; De Coning, T. J.; Smit, E. v d M.
This article outlines a conceptual model of corporate entrepreneurship in which management’s influence on an organisation is highlighted. The model is intended to depict the organisational elements that relate to South African industrial organisations. Corporate entrepreneurship or intrapreneurship is represented by a set of three ‘key factors’. Two key factors were taken from the well researched ENTRESCALE (Knight, 1997) and focus externally. The other key factor focuses internally and represents management’s influence on structures and processes, and relations. The model encompasses product lines and changes, research and development leadership, new techniques employed in the organisation, the organisation’s competitive posture and its risk-taking propensity, its environmental boldness and the decision-making style of management in terms of external opportunities. The model also addresses internal structures and processes, as well as relations. It emphasises intrapreneurial goal setting, and promotes the use of a system that facilitates and manages creativity and innovation. It addresses an intracapital system to supply resources and it facilitates communication. The model allows for staff input to management, a degree of intrapreneurial freedom, a problem-solving culture and empowered staff. Finally, it provides for the championing of intrapreneurship by management. The model is tested in context. There is significant negative correlation between intrapreneurship and organisational age, but not between the intrapreneurship and organisation size. The intrapreneurship factors furthermore correlate significantly with the measure of share price volatility, β (Beta).
Dividend payout and future earnings growth : a South African study
(AOSIS, 2011) Vermeulen, M.; Smit, E. v d M.
Conventional wisdom posits that the payment of dividends will decrease the funds available to finance growth, and will therefore lead to lower future earnings growth. This belief was challenged in recent years with research that tested the relationship between dividend payout and future earnings growth, both on the individual company level and aggregate market level in different countries. Recent results contradict popular belief, and show that companies with high payout ratios tend to realise stronger future earnings growth. This study investigated the same relationship in South Africa, as an example of a developing country, using a large sample of 12,669 company-years over the period 1973 to 2009. The results fully support recent findings that dividend payouts precede higher future earnings growth.
Is responsible investing ethical?
(AOSIS, 2008) Viviers, S.; Bosch, J. K.; Smit, E. v d M.; Buijs, A.
A growing number of investors, globally and in South Africa, are embracing the concept of Responsible Investing (RI). In essence RI refers to a combination of investment strategies that integrate ethical as well as environmental, social and corporate governance considerations into investment analysis and decision making processes. Given the growing influence that investors are exerting on corporate decision making, the purpose of this paper was to position RI within an appropriate ethical framework. It is shown that RI constitutes a form of moral investing as responsible investors express a concern for universal principles which exceed the prescriptions of the law. The practice of RI was further contextualised in relation to seven approaches to ethical reasoning, namely ethical egoism, utilitarianism, deontological ethics, the ethics of care, virtue theory, the conventional approach to ethics as well as emotivism. From the evidence presented, it seems as if responsible investors in South Africa give preference to the principles underlying deontological ethics as well as the ethics of care (particularly with regard. to the protection of human rights and equality as well as the promotion of distributive and compensatory justice).
Measuring cash flow flexibility of companies : the cumulative index-difference
(AOSIS, 2002) Steyn, B. W.; Hamman, W. D.; Smit, E. v d M.
Cash is king. Even a highly profitable company can find itself in search of financing due to a lack of cash to honour its obligations. If this situation is only temporary and external sources of finance are freely available, this cash flow obstacle does not have to be detrimental to the stakeholders of the company. However, if the poor cash position of a company is not temporary, but rather an integral part of its structure and a result of its strategy, stakeholder interest may be at risk. Although insolvency is seldom the outcome, such companies find themselves struggling because of their cash flow inflexibility. The cumulative index-difference aims to identify companies that are cash flow inflexible, in order to enable stakeholders to take timely measures to prevent a negative outcome. With adjustments in strategy and preventative measures taken, the cash flow positions can be improved to prevent a disaster.
Non-consumer based drivers of store success in a South African food retail group
(AOSIS, 2012) Vleggaar, M.; Smit, E. v d M.
The research objective of this study was to determine the key drivers of store success in a large food retail group in South Africa. The group currently operates in excess of 800 stores, managed by independent retailers on a franchise basis. Both the biographical details of the store owners and their management styles, demonstrate considerable variability. The effects of six categories of explanatory variables were related to two overall measures of store success – sales growth and an internal measure of store performance – first pairwise and second, by stepwise multiple regression. The bibliographical profiles of the owners, with the exception of age and marketing experience did not predict store success, nor did the family history or number of stores owned. The legal form of ownership had no influence on performance either. As far as competition is concerned, specific competitors and competition density did not contribute to success, but the distance to the nearest competition was positively related to store performance. The implementation of category management and an increased frequency of stock take, as examples of operational procedures, were positively associated with performance. Two leadership styles, one related to a clear articulation of values and the other to the management of deviations from set goals did positively impact on store performance. Active participation in the local community was also reflected in improved store performance. Disappointingly, there was little evidence of significant relationships between retail sales growth and the selected variables. The multivariate model, however, explained approximately twenty per cent of the store performance measurements.
Persistence in the performance of South African unit trusts
(AOSIS, 2000) Von Wielligh, J. F. C.; Smit, E. v d M.
The persistence of performance of the General Equity Unit Trusts and All Unit Trusts that traded in South Africa during the period January 1988 to December 1997 and January 1993 to December 1997, is analysed using three models of performance measurement, namely the Capital Asset Pricing Model, a two-factor Arbitrage Pricing Theory model and a three-factor Arbitrage Pricing Theory (APT) model developed in this study. The Capital Asset Pricing Model does not explain the relative returns of the different portfolios. Both APT models account for almost all of the cross-sectional variation in expected returns. It is shown that there is evidence of both short-term and long-term persistence in performance of South African unit trusts. It appears that the worst performing unit trust portfolio tends to stay the worst performer. The portfolio of unit trusts with an average monthly return may eventually become the top performing portfolio, while the top performer over time tends to becomes an average performing portfolio.
Relationship between share index volatility, basis and open interest in futures contracts : the South African experience
(AOSIS, 2003) Motladiile, B.; Smit, E. v d M.
In a rational efficiently functioning market, the price of the share index and share index futures contracts should be perfectly contemporaneously correlated. However, in practice the cost of carry model is obscured as the basis varies and is normally not equal to the cost of carry. This study uses the Chen, Cuny and Haugen (1995) model to examine the relationship between the basis and volatility of the underlying index and between the open interest of the futures contract and the volatility of the underlying index. The tests were performed on data from ALSI, FINI and INDI futures contracts. The sample period was from January 1998 to December 2001. The results confirm the conclusion of Chen et al. (1995) who found the basis to be negatively related to the volatility of the underlying index. The other main prediction of the Chen et al. (1995) model, which is also supported by the current study, is that open interest is significantly related to the volatility of the underlying index. The results further support the proposition of Helmer and Longstaff (1991) of a highly significant negative concave relationship between the basis and the interest rate.

Browsing by Author "Smit, E. v d M."

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