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- Volume 7, Issue 2, 2014
Journal of Economic and Financial Sciences - Volume 7, Issue 2, 2014
Volume 7, Issue 2, 2014
Author Gideon ElsSource: Journal of Economic and Financial Sciences 7, pp 267 –270 (2014)More Less
It is unimaginable to think that this is the sixteenth issue of the Journal of Economic and Financial Sciences. There will still be two further issues published this year - the normal, third issue of Volume 7 in October and also a special issue of the journal with a focus on competitiveness.
The relationship between Double Taxation Agreements and the provisions of the South African Income Tax ActSource: Journal of Economic and Financial Sciences 7, pp 271 –282 (2014)More Less
This article investigates the legal status of Double Taxation Agreements, and the relationship between Double Taxation Agreements, which are concluded in terms of section 108 of the Income Tax Act, and the provisions of the Income Tax Act (taking into account the provisions of the Constitution, and the national and international rules for the interpretation of statutes). An important conclusion reached was that as the Vienna Convention on the Law of Treaties represents customary international law and as such forms part of South African law, the principles contained in the treaty should be taken into account when interpreting South African legislation (including Double Taxation Agreements).The final conclusion of the research was that Double Taxation Agreements have a dual nature - forming part of domestic legislation and being classified as international agreements. The provisions of the Double Taxation Agreement should be taken as overriding any conflicting legislation in the Income Tax Act.
How pre-admission characteristics affect the performance of CTA students at a South African universityAuthor Gretha SteenkampSource: Journal of Economic and Financial Sciences 7, pp 283 –298 (2014)More Less
The completion of a Certificate of Theory in Accounting (CTA) is an essential and challenging part of qualifying as a chartered accountant (CA) in South Africa. The objective of this research was to determine how certain pre-admission student characteristics impact CTA performance at a South African residential university (Stellenbosch University). Current CTA students were asked to complete a questionnaire, which requested information regarding the characteristics that they possessed upon admittance into the CTA programme. Past performance in undergraduate studies showed the strongest correlation with CTA performance, and is thus a valid admission criterion. Characteristics that relate to reduced performance in CTA studies include: not completing the undergraduate programme in the minimum amount of time, being an extrovert, underdeveloped literacy skills and focusing on the details rather than the big picture. Such students are at risk and could benefit from targeted interventions.
Source: Journal of Economic and Financial Sciences 7, pp 299 –314 (2014)More Less
The purpose of this paper is to test the existence of the J-curve effect and to show whether the Marshall-Lerner condition holds in the South African manufacturing sector. Using quarterly data from 1995 to 2010, the study uses the vector error correction modelling technique as well as impulse response functions to attain the research objectives. The results show that a long-run equilibrium relationship exists between the manufacturing trade balance and the three explanatory variables: real effective exchange rate, real domestic and foreign income levels. Overall, the results show that a depreciation in the domestic currency results in a deterioration in the manufacturing trade balance in the short run, and that this is followed by an improvement in the long run. The study finds evidence of the existence of the J-curve in the South African manufacturing sector. The long-run dynamics suggest that the Marshall-Lerner condition holds.
Anti-competitive behaviour in the agri-food and steel value chains in the South African manufacturing sectorSource: Journal of Economic and Financial Sciences 7, pp 315 –340 (2014)More Less
Despite the fact that it has existed for over ten years, the Competition Act has had little impact in diluting the dominance of big business in the South African manufacturing sector. This study sought to ascertain the extent of anti-competitive behaviour in two sub-sectors of the South African manufacturing sector and to determine whether the competition authorities should focus on supporting SMEs as competitors to big business. The findings indicated that SMEs in these two sub-sectors face unique difficulties in fighting anti-competitive behaviour, and that there is scope for the competition authorities to facilitate the participation of SMEs in the economy through the use of tools such as market inquiries, the Corporate Leniency Policy and structural remedies.
Author Ailie CharterisSource: Journal of Economic and Financial Sciences 7, pp 341 –360 (2014)More Less
Several studies of the Capital Asset Pricing Model (CAPM) in South Africa find that beta cannot explain returns. However, these studies do not consider the effect of bull and bear markets, yet over the period 1995-2009, excess market returns were positive in only 98 of 180 months. The influence of market conditions on the risk-return relationship is examined internationally by evaluating the conditional risk-return relationship where risk premiums are allowed to vary in bull and bear markets, and the dual-beta CAPM, which allows for the sensitivity of an asset to the market to vary under the two economic states. In this study, the ability of these two models to explain returns on South African shares is compared to the CAPM using the Fama and MacBeth (1973) and panel data approaches. The dual-beta model is found to be more successful than either the conditional relation or CAPM, as bull- and bear-market betas differ; but the estimates of the risk premiums in this model are significant only after adjusting for market segmentation. The findings thus indicate that asset-pricing models with time-varying risk should be the focus of future asset-pricing tests.
The introduction of a gambling tax in South Africa - what are the odds on the implementation thereof?Source: Journal of Economic and Financial Sciences 7, pp 361 –374 (2014)More Less
The South African Revenue Service has been exploring the possibility of implementing a form of taxation on gambling winnings since the Minister of Finance's Budget Speech in 2010. On a superficial level it seems a logical mechanism for broadening the tax base - a case of increasing the tax collected from those who can afford the luxury of gambling. There are, however, a number of unintended consequences that government does not seem to have considered. As a result, this article uses a detailed content analysis of the prior academic and professional tax literature to explore possible weaknesses/flaws of a tax on gambling winnings in South Africa. These include the administrative burden of such a tax, certain economic consequences of allowing gambling losses as a tax deduction and the possible social consequences thereof. These findings mean that the article provides a meaningful contribution by critically assessing the proposed tax with the aim of informing policy development and future quantitative studies on a tax on gambling winnings.
Tax risk-management analysis : comparison between the United States of America, the United Kingdom and South AfricaSource: Journal of Economic and Financial Sciences 7, pp 375 –392 (2014)More Less
Tax risk-management (TRM) is a little-studied area of corporate governance, despite the proliferation of ever more complex tax legislation that can have a material impact on the sustainability of organisations. In this light, the aim of this research is to explore policies and procedures relied on by tax authorities in the United States of America, the United Kingdom and South Africa to encourage a culture of compliance with tax laws. For this purpose, the research differentiates between specific and generic tax risks. These include transaction, operational, compliance, financial accounting, portfolio, management and reputation risk. The study highlights how each TRM-related policy or programme addresses these tax risks and compares the TRM systems in the three jurisdictions.
Author Sophia BrinkSource: Journal of Economic and Financial Sciences 7, pp 393 –414 (2014)More Less
The popularity of client loyalty programmes has increased drastically over the past few years, with more than 100 suppliers in South Africa currently making use of them. On 1 July 2007 the IASB issued IFRIC 13 to give specific guidance to suppliers on the accounting treatment of client loyalty programme transactions. In the process of compiling a new revenue standard, the International Accounting Standard Board published Exposure Draft ED/2011/6 Revenue from Contracts with Customers on 14 November 2011 to supersede virtually all existing revenue standards and interpretations under IFRS, including IFRIC 13. Although the effective date of the new revenue standard is 1 January 2017, in view of the nature of a client loyalty programme transaction it would be prudent for suppliers to start collecting data immediately for the retrospective application. Given the time limit and the minimal specific reference to client loyalty programme transactions in the proposed new model, the main aim of the research was to investigate the proposed new model's impact on the accounting treatment of client loyalty programme transactions. The similarities and differences between the guidelines in IFRIC 13 and those of the proposed new model as well as the specific paragraphs in the proposed new model that are applicable to client loyalty programme transactions were considered. A specific recognition difference and a presentation difference has been identified between the accounting treatment of a client loyalty programme transaction under IFRIC 13 and that of the proposed new model.
Author Monique Strauss-KeevySource: Journal of Economic and Financial Sciences 7, pp 415 –432 (2014)More Less
The Competency Framework of the South African Institute of Chartered Accountants (SAICA) details specific competencies, but also places emphasis on the pervasive skills that need to be attained by candidates in order to qualify as South African chartered accountants (CAs (SA)). This article presents the results of a literature review and empirical work that provides conflicting results as to whether the education, the training or a combination of the programmes are responsible for ensuring that aspirant CAs (SA) are equipped with pervasive skills. This study returned significant findings, indicating that SAICA-accredited academics are not aware of their responsibility to ensure that aspirant CAs (SA) have achieved all the competencies as set out in SAICA's Competency Framework. While this apparent shortcoming may exist, it is the responsibility of the Heads of Academic Departments and SAICA alike to further inform academics that the onus to transfer both competencies (specific and pervasive) rests predominantly with them.
Source: Journal of Economic and Financial Sciences 7, pp 433 –450 (2014)More Less
In this study various annuity strategies are compared for South African males who retired during the 30 years from 1960 to 1989. To this end, the present values of the monthly cash flows provided by 47 different annuity strategies are calculated and compared in order to ascertain which strategy would have provided the largest financial benefits. In contrast to previously held general beliefs, the calculations demonstrate that living annuity strategies are superior to composite annuity strategies, which in turn outperform switching annuity strategies, whereas life annuities yield the lowest return.
Author Hardus Van ZylSource: Journal of Economic and Financial Sciences 7, pp 451 –466 (2014)More Less
The aim of this article is to determine the impact that employee diversity attributes have on labour productivity in the South African workplace. Given the perceived general low levels of labour productivity in the South African economy, this particular research aims to serve as a further contribution to our understanding of the labour productivity debate when a broad range of employee attributes at firm and individual levels are considered. A firm-based model is used for the estimation of the link between the employee group demographic characteristics and labour productivity, and an employee remuneration model is used to estimate the link between individual employee diversity demographics and labour productivity. The main conclusions of the estimation results are that a less age-diverse workforce, higher education/training levels, greater levels of gender diversity and a more racially diverse workforce are pre-requisites for higher real remuneration and labour productivity benefits.
Source: Journal of Economic and Financial Sciences 7, pp 467 –484 (2014)More Less
The 1970s saw a significant increase in the volume of research on individuals' subjective experience of well-being. The subjective well-being of university students has received less attention, however. Student well-being is important, given the widespread concern over the high dropout rates at institutions of higher learning in South Africa (Council of Higher Education, 2013; Van Zyl, 2010). The paper adds to the existing body of literature through an exposition on the possible influence of variables forthcoming from the literature, on the overall subjective well-being of first-year economics students at a comprehensive university. Variables that displayed a significant and positive contribution to subjective well-being were first-year and extended-degree students, the university being the institution of choice, feeling at home, knowing exactly how the university functions, and watching or participating in sport. Variables that were found to be significant with a negative contribution to subjective well-being levels were: worries about tests, studying less than 10 hours per week and, interestingly, living on campus.