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- Volume 3, Issue 2, 2009
Journal of Economic and Financial Sciences - Volume 3, Issue 2, 2009
Volume 3, Issue 2, 2009
Author Gideon ElsSource: Journal of Economic and Financial Sciences 3, pp 113 –114 (2009)More Less
Regular readers and contributors to this journal would have noticed that this issue hails the commencement of a new phase in the life of the journal with the finalisation of our newly established editorial board. Our sincerest thanks go out to each and everyone whom have agreed to take up this very important task that adds a further dimension to the quality promotion of this publication.
The impact of accounting standards developments and financial reporting complexities on the audit committeeSource: Journal of Economic and Financial Sciences 3, pp 115 –132 (2009)More Less
The developments in accounting standards and the increased complexity of financial reporting present many challenges and difficulties to the preparers of financial statements and the audit committee as overseers of the financial reporting process. Accordingly, the audit committee should consist of independent directors with the right experience and expertise and, given the complexity of today's financial statements, it is essential that they should also be financially literate, with at least one member being a financial expert. This article discusses the impact of the development and increased technical nature of accounting standards on the constitution and workings of the audit committee. Empirical evidence is also provided that the average audit committee at the largest listed companies in South Africa consists of members who can be considered as financially literate, with at least one member being a financial expert, and that they are compensated for this expertise.
Source: Journal of Economic and Financial Sciences 3, pp 133 –152 (2009)More Less
The purpose of this study is to determine the relationship between bank efficiency estimates, measured by Data Envelopment Analysis (DEA), and bank performance, measured by the financial ratios included in the Du Pont analysis. Annual financial statement reports were used to calculate the performance of listed banks on the JSE Limited over a ten-year period. This study is the first to use two unique DEA models: one focuses on the efficiency of the finance and investment activity, and the other on the efficiency of the operating activity of banks. The study found that the majority of significant relationships between efficiency estimates and financial ratios are negatively correlated. Further research is needed to explain this phenomenon. The practical implication of this study is that it indicates that an improvement in the DEA efficiency estimates will not necessarily result in better financial ratios. Therefore, both measurements should be used to evaluate different aspects of performance in order to stay competitive.
Source: Journal of Economic and Financial Sciences 3, pp 153 –170 (2009)More Less
The Wacky Wine Festival in Robertson, South Africa, is one of the country's largest wine festivals. The uniqueness of this wine festival is that it takes place on an existing wine route where 48 wine farms actively participate in the event. Events such as these have long been used to promote a destination or region and its products in order to generate revenue and grow tourism. This paper presents the results of a survey that was conducted during the festival in June 2009 in which 420 questionnaires were completed by visitors to the festival. The aim was to identify the determinants of visitors' spending at the festival. Factor analysis was applied to differentiate three types of wine tourists: Festinos, Epicureans and Social Adventurists. Consequently, these three groupings and other socio-demographic and behavioural attributes of festival attendees were regressed as independent variables against expenditure in an attempt to refine future marketing strategies. It was the first time that this type of research was conducted at a wine festival in South Africa, and the findings indicated that determinants of visitor spending differ from event to event. Results also showed that a variety of socio-demographic and behavioural determinants influence spending. These include age, days spent at the festival, place of origin and repeat visits. The study also identified the high spending market ("epicureans") that could assist marketers and event organisers in increasing the economic effects of the event.
Source: Journal of Economic and Financial Sciences 3, pp 171 –188 (2009)More Less
Many factors impacted the credit risk environment in the past decade, the most significant of which were the Basel II Capital Accord requirements. Foremost in the financial industry's focus was, and still is, the implementation of these requirements and their associated outcomes. In the aftermath of the Basel II implementation, credit risk managers' focus will return to understanding the portfolio philosophy in managing their credit portfolios. They will be required to adapt an integrated risk management framework, taking into account the interdependence of various building blocks, data fields and model outcomes. This paper develops and proposes a portfolio approach to the management of loan portfolios within an integrated risk management framework. The significance of this approach for the credit portfolio risk management environment and its role in maximising shareholder value are highlighted.
Author Lynette OlivierSource: Journal of Economic and Financial Sciences 3, pp 189 –194 (2009)More Less
For income tax purposes it is often vital that a taxpayer conducts a trade. Although it is not the case that only amounts arising from trading activities that are taxable (Definition of "taxable income in s 1 of the Income Tax Act 58 of 1962 ("the act")), generally expenditure is only deductible if the taxpayer conducted a trade (s 11(a)). Where expenditure is partly incurred for the purposes of trade and partly for non-trading purposes, a deduction is only allowed to the extent that the expenditure was incurred for the purposes of trade (s 23(g)). In addition, a company may only carry forward an assessed loss if it conducted a trade in the subsequent year of assessment (s 20(2A)). Special rules are also applicable to certain specific trades: see, for example, s 26, which provides for the determination of taxable income of any person carrying on pastoral, agricultural or any other farming operations.