Research Reports (University of Stellenbosch Business School)

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    Will mandatory audit firm rotation reduce audit market concentration in South Africa?
    (AOSIS (Pty) Ltd., 2021-07-23) Wesson, Nicolene
    Purpose: Deconcentrating the audit market was one of the stated objectives of the proposed mandatory audit firm rotation (MAFR) ruling in South Africa. With MAFR being a contentious topic, this study aimed to explore the possible effect of MAFR on audit market concentration in South Africa in anticipation of the implementation thereof in 2023. Design/methodology/approach: A sample of 415 South African listed companies was studied for the period 2010–2018. Data were mainly captured from annual reports. Descriptive statistics and significance testing were performed on calculated concentration ratios and identified audit firm rotations. Findings/results: South African audit market concentration mirrored empirical evidence from most developed countries – with Big 4 audit firms dominating the audit market, whilst a monopoly within the Big 4 audit firm grouping was also evident. Based on observed audit firm concentration and audit firm rotation behaviour, it was anticipated that MAFR might further increase audit market concentration. A concerning result was the sheer scale of audit firm rotations to be carried out in anticipation of MAFR in 2023. Practical implications: This study identified the impairment of audit quality and increased costs as possible unintended consequences of MAFR in South Africa. Originality/value: This study contributed to the limited body of knowledge on the possible effect of MAFR in South Africa. This study proposed alternatives to MAFR and recommended areas for future research to support evidence-based decisions on remedies to address audit quality and audit market concentration in South Africa.
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    Trends in foreign agricultural trade and its impact on households in South Africa
    (2020-08-19) Van Wyk, Roscoe Bertrum; Van Wyk, Bianca Flavia; Makatjane, Katleho Daniel
    This study examines the trends in foreign trade in agriculture focusing on imports and exports for different sub-sectors and the identity of agricultural trade flows with specific regions and countries. Secondly, to understand how agricultural imports and exports improve the living standards of households in South Africa. The study uses a quantitative research approach by analysing trade data from the South African Revenue Services (SARS) and household data from the World Bank and OECD. The threshold vector autoregressive (TVAR) model is employed to establish a nonlinear causal relationship. The Diks-Panchenko nonparametric causality test revealed no causal relationship between the foreign agricultural trade and household consumption and household income in South Africa. However, with the increase of exported agricultural goods from South Africa, there are many significant benefits to South African households.
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    Reframing a novel decentralized knowledge management concept as a desirable vision: As we may realize the Memex
    (MDPI, 2021-04-05) Schmitt, Ulrich
    Proposing a major (though envisaged synergetic) shift in the knowledge management (KM) paradigm needs to convince a skeptical audience. This article attempts such a feat and motivates its conceptual considerations by fusing a wide scope of theoretical KM-related foundations in response to current KM unsustainabilities and emerging enabling technologies. The envisioned workflows, infrastructure, affordances, and impact resulting from the progressing design science research and prototyping efforts are consolidated and reframed, guided by a five-step visioneering process and twelve triple-criteria-clusters combining innovative, technological, and vision-related qualities. Inspired by Bush’s “Memex”, a desirable vision never realized since its suggestion three quarters of a century ago, the novel KM system (KMS) pursues the scenario of a mutually beneficial co-evolution between individual and institutional KM activities. This article follows up on the unsatisfactory and unsustainable state of current KM affairs suffering from accelerating information abundance, invisible work, structural interdisciplinary holes, lacking personal tools, and widening opportunity divides. By portraying a potentially transformative and game-changing technology, the crafting and drafting of a desirable, sustainable, and viable KMS vision assures transparency and can be more easily shared with a critical mass of stakeholders as a prerequisite for creating the respective future KM reality. The drafting of the “Desirable Sustainability Vision” is envisaged to assist a currently accepted KMS start-up project and investment.
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    Factors influencing dividend payout decisions : evidence from South Africa
    (AOSIS, 2019) Nyere, Lovemore; Wesson, Nicolene
    Background: Dividend payout is one of the most debated contemporary corporate finance issues. No universal theoretical model describes the factors that corporate managers consider in dividend payout decisions. This study extends previous South African empirical research on dividend payout trends and motivations for Johannesburg Stock Exchange (JSE)-listed industrial companies over the period 1999–2014. The study period coincides with the introduction of share repurchases as an alternative distribution method, covers multiple dividend distribution regulatory amendments and overlaps the global financial crisis of 2008. Objectives: The aim of this study was to ascertain whether the global financial crisis of 2008 affected dividend payouts and to identify factors that influenced dividend payout decisions of JSE-listed industrial companies over the period 1999–2014. Method: Descriptive statistics and a fixed-effects panel regression analysis were applied to dividend data extracted from published annual reports of JSE-listed industrial companies over the period 1999–2014. Results: Dividend distributions of JSE-listed industrial companies increased over the study period in contrast to declining global dividend distribution trends. A significant increase in dividend payout was found when comparing pre- and post-recession periods, in line with the positive impact of dividend distribution regulatory reforms. Company size (+), profitability (+), sales growth (−) and free cash flow (−) were identified as significant factors that influence dividend distributions of JSE-listed industrial companies. Conclusion: The results offer support for the company life cycle hypothesis, the taxes and clientele hypothesis and corporate managers’ preference for stable dividend policies.
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    Strategies, practices and skills for competitiveness in the digital economy : a perspective on large companies in South Africa
    (2014-08) Craffert, Leona; Ungerer, Marius; Visser, Kobus; Morrison, John; Claassen, Walter
    The competitiveness of companies in the digital economy is a business concern. Eighty two large South African companies participated in a study on strategies, practices and skills for competitiveness in the digital economy - in that manner demonstrating their willingness and commitment to contribute towards the local understanding and exploration of this topic.