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- Volume 17, Issue 5, 2014
South African Journal of Economic and Management Sciences - Volume 17, Issue 5, 2014
Volumes & issues
Volume 17, Issue 5, 2014
Perceptions of factors influencing career success of professional and business women in South AfricaSource: South African Journal of Economic and Management Sciences 17, pp 531 –543 (2014)More Less
This article reports on an empirical study that investigated factors influencing women's career success. Statistics relating to the field of women in management indicate that, worldwide, women are underrepresented in executive and decision-making positions. Women face unique challenges in their career pursuit that may prevent them from moving up to executive positions. A framework to investigate the factors influencing career success indicates that factors such as demographics, personality, culture, barriers, external and internal support impact on the career success of women. This study surveyed a sample of 301 professional and business women in South Africa. The results of the empirical survey showed that there are statistical significant relationships between groups of women based on their demographics and their perceptions of the factors that influence their career success.
The association between the seven elements of the black economic empowerment score and market performanceSource: South African Journal of Economic and Management Sciences 17, pp 544 –556 (2014)More Less
The black economic empowerment (BEE) score consists of seven elements, namely ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development. The purpose of this study is to establish whether an association exists between an entity's BEE elements and its share returns in the short term.
Based on prior literature, it appears that the market reacts positively to an announcement of a BEE deal, although the literature also indicates that an entity's BEE score, which includes all seven elements of the BEE score, bears a negative relationship to its share returns. Therefore the association between the various BEE elements and share returns needs to be investigated. The study uses a multivariate regression analysis that controls for factors influencing share returns. The study includes the BEE element data as obtained from the survey of the top empowerment companies carried out by Empowerdex/Financial Mail for the period 2005 to 2011.
The results of this study indicate that a significant positive association exists between the management control element of the BEE score and the entity's share returns. Furthermore, a significant negative association exists between the ownership and preferential procurement elements of an entity and its share returns. This study contributes to the literature on BEE in the accounting and finance field in South Africa as well as enhances the understanding and effect of BEE compliance through implementation of the generic scorecard as required by the 2007 codes of good practice. The results of this study would be of interest to government policy analysts, investors and managers.
Foreign direct investment and institutional adequacy : new Granger Causality evidence from African countriesAuthor Adewale R. AregbesholaSource: South African Journal of Economic and Management Sciences 17, pp 557 –568 (2014)More Less
The strategic importance of foreign direct investment in the contemporary economies has been tremendous. While various countries (developed and developing economies) have benefitted from the direct and spillover effects of FDI, which range from improved technology and knowledge diffusion through to individual and corporate capability enhancement, FDI outflow remains largely channelled to the developed countries, and the rapidly developing countries in Asia and South America. Evidence suggests that the development-enhancing effects of FDI are felt more highly in the developing economies, such as economies in Africa. However, FDI inflow to the developing economies has been very low. Using data generated from the African Development Indicators (ADI) between 1980 and 2008 in econometric estimations, this paper finds that government policies (especially fiscal and monetary policies) play significant roles in facilitating FDI inflow to the African countries studied. The study thereby suggests an improved regulatory framework to make Africa more attractive to inflow of FDI.
Source: South African Journal of Economic and Management Sciences 17, pp 569 –583 (2014)More Less
High profile scandals have brought about a renewed interest in business ethics and, in particular, in understanding the factors that promote ethical behaviour. Business ethics is about identifying and implementing values, rules and standards of conduct for guiding morally right behaviour in an organisation's interaction with its stakeholders. Against this background a quantitative analysis of the ethical practices of 46 companies operating in the Eastern Cape automotive industry was conducted to determine the extent to which ethics-related interventions contributed to establishing and maintaining an ethical organisational environment. A structured online questionnaire was used to collect the data. The data collected was subjected to extensive statistical analyses, including Cronbach Alpha coefficients and item total correlations, and various descriptive statistics were included as a quantitative summary of the data. A constant reference value for the study was also calculated to allow inferences regarding the significance of the tested variables to the study. The results revealed that the organisations in the sample are highly ethical due to the presence of ethics-related interventions, including a code of ethics, committed leadership, adherence to internal and external governance requirements, compliance with legislation and encouragement and disclosure of unethical behaviour. In light of the high number of ethical scandals internationally, this study will add to the empirical body of business ethics research, as it provides organisations with a framework to establish and maintain an ethical business environment.
Source: South African Journal of Economic and Management Sciences 17, pp 584 –600 (2014)More Less
Counterparty valuation adjustment (CVA) risk accounts for losses due to the deterioration in credit quality of derivative counterparties with large credit spreads. Of the losses attributed to counterparty credit risk incurred during the financial crisis of 2008-9 were due to CVA risk; the remaining third were due to actual defaults. Regulatory authorities have acknowledged and included this risk in the new Basel III rules. The capital implications of CVA risk in the South African milieu are explored, as well as the sensitivity of CVA risk components to market variables. Proposed methodologies for calculating changes in CVA are found to be unstable and unreliable at high average spread levels.
Source: South African Journal of Economic and Management Sciences 17, pp 601 –608 (2014)More Less
We find that for the period 1994-2011 there is robust statistical evidence that, in the long run, net exports are boosted by a weaker real effective exchange rate. However, this effect does not hold in the short run. We thus find empirical evidence supporting the J-curve effect for South Africa.
Source: South African Journal of Economic and Management Sciences 17, pp 609 –623 (2014)More Less
Angola's attractiveness to PE investors and the potential to increase PE investments in the country are explored. Primary data were collected using a survey of 18 PE funds that invest or have considered investing in Angola, followed by 10 expert interviews to gain deeper insight into the country's institutional and economic environment, and its potential for PE investments. It is found that most PE funds are attracted to Angola by its rapid economic growth and high potential returns. The country is also vastly undersupplied, and many key economic sectors are fast developing, presenting exciting opportunities for investors. Nevertheless, PE in Angola remains limited, mainly owing to the difficulty of doing business in Angola, and owing particularly to the unfavourable regulatory environment. There is no regulation or process when it comes to the registration of PE funds in Angola, and any new regulation that applies to foreign investments is marred by unnecessary red tape, making it difficult for the investment to enter the market. Only two funds are authorised to operate in Angola: Fundo de Investimento Privado de Angola (FIPA), and BESA Activ. Streamlining regulation is critical to increasing PE flows to Angola in order to advance the country's economic and social objectives.
Source: South African Journal of Economic and Management Sciences 17, pp 624 –638 (2014)More Less
Electronic banking services such as internet banking offer bank clients substantial benefits over traditional banking channels. Although internet banking has been around for many years, increasing the use of the service by bank clients remains a priority for many managers of internet banking services. To address this managerial concern, the study investigates the factors that contribute to the enhanced use of internet banking by bank clients. Based on a literature review, internet-banking factors that could influence bank clients' actual use of internet banking were identified. Data were collected from 1 156 users of internet banking. The results of the study showed that two factors influence internet banking usage, namely internet banking facilitating conditions and internet banking risk beliefs. The more favourable internet banking facilitating conditions are perceived to be, the more likely bank clients are to increase their use of internet banking. On the other hand, the greater the perceived risks associated with internet banking, the less the chances are that clients will do their banking through the internet. On the basis of these results, recommendations are provided to enhance the use of internet banking.
Source: South African Journal of Economic and Management Sciences 17, pp 639 –652 (2014)More Less
A key challenge in the twenty-first century is to enable economic growth and increase both environmental quality and social inclusiveness, while mitigating and adapting to the impacts of climate change. The need for a transition to more sustainable consumption and production patterns is undeniable and sustainable economic growth must be placed at the heart of future development for all citizens. The South African private sector is under enormous pressure to remain globally competitive while balancing the interests of society, the environment and its shareholders. It has been suggested that there are discrepancies between what companies say and what they actually do, as they are challenged to move from policy to action. This paper evaluates the extent to which the private sector in South Africa adheres to voluntary climate change mitigation mechanisms and identifies potential market barriers impeding the large-scale uptake of such mechanisms. The research findings suggest that the private sector in South Africa has adopted a "take position, wait and see approach" which places them in a position to take advantage of and influence the opportunities and risks associated with climate change without having a negative impact on the bottom line. The primary barrier to voluntary climate change action is the vagueness of local and international policy frameworks. The different rules and resultant uncertainty around local and international frameworks appear to impede consistent and meaningful action. Although this uncertainty does not prevent the private sector from taking voluntary action, it does appear to negatively affect the overall scale and type of climate change mitigation efforts. While companies are continually improving the quality of sustainability reporting and public disclosure, the challenge still lies in translating these strategies into daily operations and sustainable practice that goes beyond ad hoc mitigation actions.
Recent internal migration and labour market outcomes : exploring the 2008 and 2010 National Income Dynamics Study (NIDS) panel data in South AfricaSource: South African Journal of Economic and Management Sciences 17, pp 653 –672 (2014)More Less
We began with the premise that South African recent migrants from rural to urban areas experience relatively lower rates of participation in formal labour markets compared to local residents in urban communities, and that these migrants are overrepresented in the informal labour market and in the unemployment sector. This means that rural to urban migrants are less likely than locals to be found in formal employment and more likely to be found in informal employment and among the unemployed. Using perspectives from Development Economics we explore the South African National Income Dynamics Study (NIDS) panel datasets of 2008 and 2010, which only provide a perspective on what has happened between 2008 and 2010. We find that while migrants in general experience positive outcomes in informal labour markets, they also experience positive outcomes in formal markets, which is contrary to expectations. We also find that there are strong links between other indicators of performance in the labour market. Earned incomes are closely associated with migration decisions and educational qualifications (e.g. a matric certificate) for respondents between the ages of 30 and 60 years. The youth (15 to 30 years old) and senior respondents (over the age of 60) are the most disadvantaged in the labour market. The disadvantage is further reflected in lower earned incomes. This is the case even though the youth are most likely to migrate. We conclude that migration is motivated by both push (to seek employment) and pull (existing networks or marriage at destination) factors. For public policy, the emerging patterns - indicative and established - are important for informing strategies aimed at creating employment and developing skills for the unemployed, migrants and especially the youth. Similar policy strategies are embodied in the National Development Plan (NDP), the National Skills Development Strategy (NSDS), etc.
Source: South African Journal of Economic and Management Sciences 17, pp 673 –690 (2014)More Less
This paper examines the 'commodity currency' hypothesis of the Rand, that is, the postulate that the currency moves in line with commodity prices, and analyses the associated causality using nominal data between 1996 and 2010. We address both the short run and long run relationship between commodity prices and exchange rates. We find that while the levels of the series of both assets are difference stationary, they are not cointegrated. Further, we find the two variables are negatively related, with strong and significant causality running from commodity prices to the exchange rate and not vice versa, implying exogeneity in the determination of commodity prices with respect to the nominal exchange rate. The strength of the relationship is significantly weaker than other OECD commodity currencies. We surmise that the relationship is dynamic over time owing to the portfolio-rebalance argument and the Commodity Terms of Trade (CTT) effect and, in the absence of an error correction mechanism, this disconnect may be prolonged. For commodity and currency market participants, this implies that while futures and forward commodity prices may be useful leading indicators of future currency movements, the price risk management strategies may need to be recalibrated over time.
Source: South African Journal of Economic and Management Sciences 17, pp 691 –699 (2014)More Less
We consider so-called volatility targeting strategies in the South African equity market. These strategies are aimed at keeping the volatility of a portfolio consisting of a risky asset, typically an equity index, and cash fixed. This is done by changing the allocation of the assets based on an indicator of the future volatility of the risky asset. We use the three month rolling implied volatility as an indicator of future volatility to influence our asset allocation. We compare investments based on different volatility targets to the performance of bonds, equities, property as well as the Absolute Return peer mean. We examine risk and return characteristics of the volatility targeting strategy as compared to different asset classes.