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- Volume 18, Issue 4, 2015
South African Journal of Economic and Management Sciences - Volume 18, Issue 4, 2015
Volumes & issues
Volume 18, Issue 4, 2015
Source: South African Journal of Economic and Management Sciences 18, pp 449 –462 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a1More Less
Previous empirical studies on the effects of foreign aid on economic growth have generated mixed results that make it difficult to draw policy recommendations. The main reason for such mixed results is the choice of a single aggregate list of countries, regardless of the disparities in levels of development. This study therefore fills the development gap by disaggregating the African data into a panel of 20 middle- income and19 low- income African countries over a period of 15 years between 1995 and 2010, and employing a dynamic generalized method of moments (GMM) model to address the dynamic nature of economic growth as well as the problems of endogeneity. The results of this study support the theoretical hypothesis that a positive relationship between aid and GDP growth exists, but only for low-income African countries, not middle-income ones. On the other hand, the study reveals that middle- income African countries tend to experience a greater impact on their economic growth from foreign direct investment (FDI) and natural resources revenues, mainly oil exports. This implies that the frequent criticism that foreign aid has not contributed to economic growth is flawed, at least in the case of low-income African countries. In fact, foreign aid has played a critical role in stimulating economic growth in such countries through supplementing domestic sources of finance such as savings, thus increasing the amount of investment and capital stock in them.
Source: South African Journal of Economic and Management Sciences 18, pp 463 –474 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a2More Less
Despite the widespread use of pay incentives to drive performance, few studies empirically demonstrate their long-term benefits within work-team settings in field studies; even fewer studies incorporate hybrid pay incentives in their design. This longitudinal field study explored the effects on individual work performance of allocating tellers to teams with supervisors who received hybrid pay incentives, where 60 per cent of their incentive was based on the individual performance of each of their team members and 40 per cent on their own performance. It was conducted on bulk-cash tellers working in 19 centres, using a time-series design. The results, derived from quantitative data collected from 82 individual tellers over 24 months, showed that hybrid pay incentives for supervisors of teams of tellers, some of whom were individually incentivised, were associated with significant increases in the volume, speed and accuracy of deposit processing by all the tellers. The findings empirically demonstrate the long term sustainability of improved performance associated with the introduction of hybrid pay incentive structures within work teams.
Source: South African Journal of Economic and Management Sciences 18, pp 475 –485 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a3More Less
The purpose of this study is to explore the nature of the association and the possible existence of a shortrun and long-run relationship between the stock-market indices of South Africa, India and the USA. The idea behind this combination is to know how the stock markets of these three prominent countries are related to each other. The study employs monthly data from the stock indices, namely JALSH (South Africa), NIFTY (India) and NASDAQ (USA) composite from April 2004 to March 2014. After testing for the normality of the data distribution and the stationarity of the time series data, this paper discovered a strong correlation between the stock market indices of South Africa, India and the USA. The correlation among the stock markets is high, particularly between South Africa and India. In addition, the paper attempts to discover the presence of any predictive ability among these markets by applying the Granger causality test. The result indicates that the NASDAQ index has no predictive ability as far as the JALSH and NIFTY indices are concerned. However, the JALSH index has a predictive ability on the NIFTY index. After testing the Granger cause relationship, the existence of a long-run and short-run relationship is tested. The long-run relationships among the stock market indices are analysed, following the Johansen and Juselius multivariate cointegration approach. The result suggests the absence of a long-run relationship among the three stock market indices. Short-run relationship is investigated with the Vector Auto-regression (VAR) model, and the outcome obtained shows that both the USA and the South African stock markets are predicted only by their own past lags. However, the Indian stock market is seen to be a function of its own past lags and the past lags of the South African stock index.
An industry analysis of the power of human capital for corporate performance : evidence from South AfricaAuthor Carla MorrisSource: South African Journal of Economic and Management Sciences 18, pp 487 –499 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a4More Less
Even in industrialised emerging economies, the value-generating competencies of a workforce, known as its human capital efficiency, are a key resource for commercial success. The objective of this research is to empirically investigate the relationship between human capital efficiency (as measured by value-added human capital) and the financial and market performance of companies listed on the Main Board and Alternative Exchange (ALT-X) of the Johannesburg Stock Exchange. Return on assets, revenue growth and headline earnings per share were used as financial performance indicators; while market-to-book ratio and total share return were used to measure market performance. Multivariate regressions were performed, with panel data covering 390 companies in the financial, basic materials, consumer services, consumer goods, industrial and technology industries from 2001 to 2011. First, human capital efficiency was found to have no effect on the market performance of listed companies in South Africa. Secondly, higher human capital efficiency was found to result in the extraction of greater returns from both tangible and intangible assets in all industries. Thirdly, higher profitability was found to be associated with higher human capital efficiency in almost every industry in South Africa, with the exception of the technology industry, where human capital efficiency was found to be independent of headline earnings per share. Finally, higher revenue growth was found to be positively associated with human capital efficiency in those industries which are not consumer-driven. In the consumer-driven industries, human capital efficiency contributes to bottom line profitability even though it is not a driver for revenue growth. Overall, the results of this study confirm that human capital efficiency enhances a company's financial performance, whether it be through a greater capacity for production and service delivery, tighter cost controls or better use of company resources. Management in all South African industries are encouraged to develop the value-creating abilities of their employees through employer-driven personnel enrichment and training programs and by incentivising workers to pursue further education.
Value relevance and corporate responsibility reporting in the South African context : an alternate view post king-IIISource: South African Journal of Economic and Management Sciences 18, pp 500 –518 (2015) http://dx.doi.org/10.17159/2222-436/2015/v18n4a5More Less
This study tests for the value relevance of corporate responsibility reporting (CRR) based on a sample of companies listed on the Johannesburg Stock Exchange (JSE). It also provides evidence of the statistical significance of the potential contribution of CRR to share price values in the South African context at a particular point. On the basis of a sample of 82 companies on the JSE, hierarchical regression analysis was used to test the contribution of levels of corporate social responsibility disclosures to company share prices, over and above the contribution of the size of a firm's equity and net income. In contrast with other findings which predict a positive relationship between company share price and levels of corporate social responsibility disclosures, the latter are found to have no significant association with company share price over and above the associations of the size of a firm's equity and net income. Bivariate associations, however, indicate a significant association between share price and levels of corporate social responsibility disclosures. On the basis of these findings, it is argued that disclosures increase for firms with larger endowments of equity, yet corporate social responsibility disclosures do not necessarily add value to company share price.
The synergistic and complementary effects of supply chain justice and integration practices on supply - chain performance : a conceptual framework and research prepositionsSource: South African Journal of Economic and Management Sciences 18, pp 519 –533 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a6More Less
In recent years, firms have been using their supply chain integration (SCI) as a competitive weapon in the intensive, globalised competitive arena. The contingent perspective in supply chain management maintains that it is necessary to observe the interaction between SCI practices and supply chain justice. A critical issue to be resolved is whether this fit leads to synergistic and complementary effects on supply chain performance. In order to contribute to this research problem, we analysed supply chain justice instances in order to determine the importance of supply chain justice, as well as highlights complementary role in SCI and its influences on supply chain performance. A conceptual framework has been developed and five propositions established to verify the contents of a theoretical study. Accordingly, balancing the adoption of SCI practices and supply chain justice will lead to the generation of greater benefits relative to the effect of both independent driving forces on supply chain performance. Furthermore, the proposed framework has been analysed in order to examine its applicability in the South African context. The study thereby suggests the empirical research guidelines and the paper concludes with a discussion of future research.
Financial indicators of company performance in different industries that affect CEO remuneration in South AfricaSource: South African Journal of Economic and Management Sciences 18, pp 534 –550 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a7More Less
In an attempt to address the growing gap between chief executive officer (CEO) remuneration and that of the general worker, reign in rising CEO remuneration, and justify the portion of long-term incentive pay that makes up the bulk of CEO remuneration, shareholders and other stakeholders are trying to find definitive factors that will link CEO remuneration to company performance. Finding this link has become central to all executive remuneration issues. The results of the studies linking CEO remuneration to company performance are varied and inconclusive, particularly in South Africa. The reason for this is that previous studies have not looked at whether the company performance measures chosen have definite relationships with CEO remuneration in each industry. This study investigated eleven financial indicators of company performance to determine which of them have significant and positive relationships to CEO remuneration in different industries in South Africa. 254 South African listed companies, spread over 5 industries, were analysed for the period 2008 to 2012 using panel data analysis and statistical tests. The results were conclusive, finding performance metrics that had a positive and significant relationship to CEO remuneration in 4 of the 5 industries investigated, as well as over the aggregate of all the industries.
Source: South African Journal of Economic and Management Sciences 18, pp 551 –556 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a8More Less
A country's level of exchange risk is closely linked to its financial stability, on a macro-economic scale. South African exchange rates, in particular, have a significant impact on imports, inflation, consumer prices and monetary policies. Consequently, it is imperative for economists and investors to assess accurately the associated exchange risks. Exchange rates, like most financial time series, are leptokurtic and contradict the classical Gaussian assumption. We therefore introduce subclasses of the generalised hyperbolic distribution as alternative models and contrast these with the normal distribution. We conclude that the variance-gamma model is the most robust for describing the log-returns of daily USD/ZAR exchange rates and their related Value-at-Risk (VaR) estimates. The model selection methodologies utilised in our analyses include the robust Kolmogorov-Smirnov test and the Akaike information criterion. Back testing on the adequacy of VaR estimates is also performed using the Kupiec likelihood ratio test.
Source: South African Journal of Economic and Management Sciences 18, pp 567 –585 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a9More Less
The sustainability of corporations globally is becoming increasingly problematic. Combined with the unique challenges of an operating entity, this could potentially expose the profitability of sustainable businesses on a daily basis. The purpose of this study is to evaluate employees' justice perceptions of performance management practices in a company in the chemical industry. The population includes all the employees in the chemical industry that was used in this study. A total of 140 questionnaires were issued to all the employees in an organisation which had undergone a performance appraisal and 102 respondents completed the surveys, giving a response rate of 72 per cent. A cross-sectional survey design was used in this study. The justice perceptions were measured according to an existing framework developed by Thurston and McNall (2010). The framework is founded on a hypothesised four-factor model constructed according to theories on organisational justice. The employees of the organisation in the chemical sector were involved in this study. Descriptive statistical analyses were used to measure perceptions of justice based on theories on organisational justice. The measuring instrument used was based on recognised models and theories. The study supports the construct validity of the measuring instrument and the reliability of the scales used. The justice constructs were used to identify specific items in the performance management practice that required improvement. The implications of the results are that continual interventions are required if employee commitment and productivity levels are to improve, resulting in a positive impact on business performance. Significant differences in perceptions by demographic groups were reported and discussed. This study explored the importance of understanding justice perceptions of performance management practices as an enabler for sustained business performance. Further, the study confirmed that justice perceptions have a direct impact on both the organisational climate and employee morale.
Assessing the potential impact of the Marikana incident on South African mining companies : an event method studySource: South African Journal of Economic and Management Sciences 18, pp 586 –607 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a10More Less
This study examines the potential impact of industrial unrest and the outbreak of violence at Marikana on 16 August 2012 on the share prices of mining companies listed on the Johannesburg Stock Exchange (JSE) using an event methodology. Contrary to expectations, the Marikana incident does not appear to have had a widespread and prolonged effect on the South African mining sector. This may be the result of the strike action already having been discounted into the price of mining shares, implying that the market was only reacting to the unusually violent (but short-lived) protest. Alternately, the results could be indicative of investor confidence in the corporate social responsibility initiatives of the South African mining industry as a whole.
This paper is the first to examine the potential impact of the Marikana incident on the share prices of mining companies listed on the JSE. It should be of interest to both academics and practitioners wanting to understand how share prices react to exogenous events. It is also relevant for corporate-governance researchers concerned with the relevance of social and governance practices in a South African setting. This research is faced with the limitations associated with most statistical research : that causality cannot be ascribed to tested relationships. Notwithstanding these limitations, it is argued that these findings are important, given the significant coverage of the Marikana incident and the ongoing debate on the need for corporate social responsibility.
Relationship intention and satisfaction following service recovery : the mediating role of perceptions of service recovery in the cell phone industrySource: South African Journal of Economic and Management Sciences 18, pp 608 –628 (2015) http://dx.doi.org/10.17159/2222-3436/2015/v18n4a11More Less
In an industry characterised by fierce competition, cell phone network providers find it increasingly difficult to retain their customers after service failure. It is therefore essential for cell phone network providers to offer effective service recovery when they attempt to restore customer satisfaction following service failure. As it has been argued that relationships between customers and service providers should be considered a key determinant of the service recovery required to restore post-recovery attitudes and behavioural intentions, the purpose of this study was to determine the relationships between South African cell phone customers' relationship intentions, their perceptions of service recovery and their satisfaction following service recovery. Personal in-home interviews were conducted to collect data from 605 cell phone customers residing in the Johannesburg metropolitan area. In addition to the significant positive relationships found between cell phone users' relationship intentions, perceived service recovery and satisfaction after service recovery, this study found that perceived service recovery played a mediating role in the relationship between relationship intention and satisfaction following service recovery. The study concludes that, although a direct relationship exists between relationship intention and satisfaction following service recovery, perceived service recovery plays an additional indirect complementary role in this relationship. It is recommended that, in addition to focusing their relationship efforts on customers with relationship intentions, cell phone network providers also offer positively perceived service recovery to these customers, as this would lead to greater satisfaction following service recovery.