Browsing by Author "Steenkamp, Gretha"
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- ItemChanges in South African executive share-based remuneration(AOSIS, 2018) Steenkamp, Gretha; Wesson, NicoleneOrientation: Institutional theory proposes that companies respond to environmental factors (such as changes in accounting requirements and the economy) in order to gain or retain legitimacy. As such, environmental factors can affect executive remuneration paid by companies. Research purpose: The purpose was to determine whether the implementation of International Financial Reporting Standard (IFRS) 2 as well as the financial recession affected the characteristics of share-based remuneration paid to South African executives. Motivation for the study: Stakeholders should be aware of whether environmental factors influence business practice relating to share-based remuneration (especially in an emerging economy, such as South Africa, where international evidence might not be applicable). Research design/approach and method: Share-based remuneration details of the chief executive officers of 28 South African listed companies were obtained for the period 2002–2009 (these dates were chosen to include both the effective date of IFRS 2 and the financial recession). Data were analysed (using analysis of variance and generalised estimating equalisation techniques) to determine whether there were statistically significant differences in the share-based executive remuneration between the period before and after the effective date of IFRS 2, as well as before and during the financial recession. Main findings: Share options usage decreased after the effective date of IFRS 2, and even further during the recession. Share-appreciation rights were increasingly used after the effective date of IFRS 2 and seemed to have replaced share options subsequent to the implementation of IFRS 2. The use of share purchase plans decreased during the recession and was replaced by performance shares. Performance vesting conditions were more prevalent in share-based remuneration schemes in the post-IFRS 2 period. Practical/managerial implications: Shareholders and regulators should take cognisance of the fact that business practice in respect of share-based remuneration is affected by new accounting standards and the economy. Contribution/value-add: This study addressed the knowledge gap in the literature regarding the effect of IFRS 2 and recession on executive share-based remuneration in emerging economies, and specifically in South Africa.
- ItemMapping the Information Technology (IT) governance requirements contained in the King III Report to the IT domains and processes of the Control Objectives for Information and Related Technology (COBIT) framework(Stellenbosch : University of Stellenbosch, 2009-12) Steenkamp, Gretha; Boshoff, W. H.; Butler, Rika; University of Stellenbosch. Faculty of Economic and Management Sciences. Dept. of Accountancy.ENGLISH ABSTRACT: Due to the integration of IT into all aspects of modern-day businesses, it is vital that the risks associated with IT are governed as an integral element of enterprise-wide corporate governance. The Third King Report on Corporate Governance (King III) was issued by the South African Chapter of the Institute of Directors in September 2009 and becomes operational on 1 March 2010. This marks the first time that the King Report has specifically addressed IT governance. King III will apply to all corporate entities. Such entities could benefit from applying an IT governance framework to ensure that they adequately address all aspects of IT governance, as required by King III. One of the comprehensive frameworks available is COBIT (Control Objectives for Information and Related Technology) issued by ISACA (previously known as the Information Systems Audit and Control Association). King III mentions the fact that COBIT could be used to assess and implement IT governance within an entity. The aim of this research is to determine whether the use of COBIT ensures compliance with King III’s requirements relating to IT governance. It was found that the main requirements in King III relating to IT governance and the processes of COBIT are well aligned, and, as a result, COBIT could be used effectively to ensure compliance with King III in relation to IT governance. However, an entity would still have to pay attention to certain King III-specific requirements. Furthermore, it was found that the application of the principles in COBIT could further strengthen the IT governance of an entity, as COBIT also addresses the more detailed activities, such as the implementation and operation of the IT system, which is not specifically addressed by King III.
- ItemThe relationship between share repurchases and share-based remuneration of executive directors of South African listed companies(Stellenbosch : Stellenbosch University, 2020-12) Steenkamp, Gretha; Wesson, N.; Smit, E. van der M.; Stellenbosch University. Faculty of Economic and Management Sciences. University of Stellenbosch Business School.ENGLISH SUMMARY : Increasingly, researchers are associating the exponential growth in worldwide share repurchases with a desire by executives to increase the share price (and possibly the earnings per share figure). Increasing the share price financially benefits executives if they have been granted share-based remuneration. Executive share-based remuneration inherently increases in value as the share price increases. Moreover, the vesting of executive share-based remuneration is most often conditional upon the share price or earnings per share, or both, reaching a certain pre-determined target. The statistical relationship between variables measuring share repurchases and executive share-based remuneration has been studied in other countries. In developed countries, a positive relationship has been found between share repurchases and executive share-based remuneration – pointing to the possibility that executives could possibly be utilising share repurchases to increase the value of their own share-based remuneration. Prior to the present study, this ethical dilemma had not been researched in South Africa, mainly owing to the lack of comprehensive data on both share repurchases and executive share-based remuneration (no public financial database keeps comprehensive record thereof). However, it is critical that this matter is addressed in South Africa, given the high levels of income-inequality existing here – which makes this research important from a social justice point of view. To bridge this knowledge gap, the research aim of the present study was to determine the relationship between share repurchases and executive share-based remuneration for South African listed companies during the 2002–2017 period. Data on both share repurchases and executive share-based remuneration were collected by using the IRESS financial database and the information disclosed in companies’ annual financial statements. In the process, a comprehensive database on both variables of interest was constructed – the first major contribution of the present study. To reach the aim of the present study, regression analyses which statistically quantified the relationship between the two variables were executed. As was expected, based on the findings of previous studies in other countries, a positive relationship was found between share repurchases and executive share-based remuneration (especially as measured by the number of instruments exercised during the year). This finding provides evidence that South African executives may be executing share repurchases in a bid to increase the value of their own share-based remuneration, rather than to maximise long-term shareholder value. To counteract this possibility, regulators should require improved disclosure of share repurchases, as well as the potential effect thereof on executive share-based remuneration, in the annual financial statements or integrated report. It was also found that a large, and increasing, percentage of general (open market) share repurchases is not announced. This leads to a lack of transparency regarding share repurchase activity in South Africa and could increase the risk of executives primarily using share repurchases to enrich themselves. It is recommended that the Johannesburg Stock Exchange requires all share repurchase activity to be announced in real time, in line with other global stock exchanges. This will improve the transparency of share repurchases and allow stakeholders to actively monitor share repurchases.
- ItemShare-based remuneration : per-director disclosure practices of selected listed South African companies(AOSIS, 2019) Steenkamp, Gretha; Dippenaar, Mareli; Fourie, Carine; Franken, DanieOrientation: The Johannesburg Stock Exchange (JSE), the Companies Act of 2008 (the Act) and the third King Report on Corporate Governance(King III) require disclosure on the share-based remuneration of directors of listed South African companies on a per-director basis. Research purpose: The first objective was to determine the disclosure practices of JSE-listed companies relating to share-based remuneration on a per-director basis, to examine whether the disclosure practices comply with regulatory requirements and whether share-based remuneration was disclosed consistently. Comparisons were made between companies in the three largest industries on the JSE (financial, industrial and basic materials industries) as well as between small, medium and large companies. The second objective was to develop a best-practice disclosure example that complies with the JSE listing requirements, the Act and the latest King Report (King IV). Motivation for the study: Previous research has hinted that share-based remuneration is poorly disclosed in South African annual reports, but it has not specifically been studied. Research approach, design and method: Data on disclosure practices were collected from annual reports. The collected data were analysed against the regulatory requirements to evaluate compliance and compared between companies to evaluate consistency. Main findings: Some companies failed to comply with regulatory requirements (did not disclose the value of share-based remuneration and the number of instruments employed). Large companies were more likely than small companies to comply with regulatory requirements. Between-company inconsistency was noted when comparing the value of share-based remuneration disclosed by companies in the sample. Practical/managerial implications: Non-compliance with regulatory requirements regarding the disclosure of per-director share-based remuneration was noted in the sample, which could lead to stakeholders having insufficient information for decision-making purposes. Inconsistent disclosure practices, leading to incomparability between similar companies, could hamper effective investment decisions. Contribution/value-add: A best-practice disclosure example was developed to assist companies seeking to comply with disclosure requirements and enhance comparability between JSE-listed companies in future.