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- Volume 8, Issue 1, 2015
Journal of Economic and Financial Sciences - Volume 8, Issue 1, 2015
Volume 8, Issue 1, 2015
Author Gideon ElsSource: Journal of Economic and Financial Sciences 8, pp 9 –12 (2015)More Less
Small and Medium Enterprises (SMEs) are important catalysts of economic growth, creating employment opportunities and contributing to the gross domestic product (GDP) of their respective countries. Unfortunately, SMEs suffer from a high failure rate due to SME managers' lack of managerial knowledge and skills. SME managers also do not use performance measures which are important in business management and provide support to the managers in decision-making processes. Elize Kirsten, Frans Vermaak and Hendrik Wolmarans determined that the use of a performance measurement tool is important in SMEs, as it can help to improve their performance and chances of survival.
Source: Journal of Economic and Financial Sciences 8, pp 13 –34 (2015)More Less
Small and Medium Enterprises (SMEs) are important catalysts of economic growth, creating employment opportunities and contributing to the gross domestic product (GDP) of their respective countries. Unfortunately, SMEs suffer from a high failure rate due to SME managers' lack of managerial knowledge and skills. SME managers also do not use performance measures which are important in business management and provide support to the managers in decision-making processes. This study contributes to the existing knowledge by determining that the use of a performance measurement tool is important in SMEs, as it can help to improve their performance and chances of survival. Accountants have the knowledge and skills to help SMEs to measure their performance and to achieve their business objectives. Accountants calculate financial ratios, explain the results and provide advice to SMEs. They, however, do not develop a Balanced Scorecard, although they perceive it to be beneficial to the SMEs.
Source: Journal of Economic and Financial Sciences 8, pp 35 –46 (2015)More Less
In most hedonic price model studies, the actual sales price of a property is employed as the dependent variable in the parametric regression analysis. Although the use of this price is pervasive, alternatives to it do exist. One such alternative is the assessed property value, which is more readily available than the actual property price. The aim of this study is to compare implicit price estimates of property characteristics (both structural and locational) based on actual sales price data and assessed property values. To this end, a seemingly unrelated regression with two hedonic price equations is used, one which employs actual market prices as the dependent variable and the other which employs assessed values. The results show that the hypothesised influence of structural and locational housing characteristics on residential property prices is the same for assessed values, and actual market prices cannot be accepted. This finding should act as a caution for hedonic practitioners not to base their conclusions and recommendations solely on the use of assessed values in hedonic price models.
Source: Journal of Economic and Financial Sciences 8, pp 47 –62 (2015)More Less
This study assesses trends and stakeholder comments on maritime port pricing and governance in South Africa. Content analysis is used to analyse Transnet National Ports Authority (TNPA) tariff applications, Ports Regulator records of decision and stakeholder comments for 2010 to 2012. The study gathers data on port pricing from 1999-2012 and uses descriptive statistics to analyse the trends in port pricing. The findings show the distinctiveness of South Africa's complementary system of ports and its uniform pricing policy. The ports are financed and managed using a mix of elements from the European and Asian port doctrines, whereas the pricing methodology appears to follow the Anglo-Saxon doctrine. A port doctrine should be developed that would be consistent with the country's vision and policies.
Source: Journal of Economic and Financial Sciences 8, pp 63 –82 (2015)More Less
This study investigated the determinants of participant spending at the Comrades Marathon 'up' run (Durban to Pietermaritzburg) and 'down' run (Pietermaritzburg to Durban). A participant survey conducted at the race in 2011 and 2012, using regression analyses, found that more behavioural than socio-demographic determinants had a significant influence on spending at both races. The two groups of participants had very similar profiles, but their spending at the event differed significantly in the way it was distributed between the 'up' and 'down' runs, and the spending was higher at the former. The reasons for the difference are currently unknown, but the implication is that the 'up' and the 'down' runs may have different economic outcomes. Although this cannot be confirmed on the basis of surveys of just two years' Comrades runs, the findings could offer strategic insights for marketing the event and enhancing its economic impact and competitive advantage.
Source: Journal of Economic and Financial Sciences 8, pp 83 –104 (2015)More Less
South Africa continues to exhibit high levels of debt-to-disposable income along with a high number of impaired credit records. The National Credit Act No. 34 of 2005 (NCA) was established in order to address these high levels. This study expands the limited research by investigating the NCA's ability to reduce levels of over-indebtedness. The study employed quarterly data (2001-2013) in an OLS regression model in order to establish the determinants of over-indebtedness and assess the impact of the NCA. It was found that the macro-economic variables GDP, prime rate, property prices, consumer consumption expenditure, debt-to-disposable income and the level of unemployment were major contributors to the level of over-indebtedness. The NCA proved to have a positive significant effect on the levels of over-indebtedness, indicating that the NCA had not succeeded in its purpose of reducing the vulnerability of consumers to becoming over-indebted. The results suggest that the affordability assessment of the NCA must be improved in order to conduct a form of credit stress testing on consumers during their application for credit.
Source: Journal of Economic and Financial Sciences 8, pp 105 –124 (2015)More Less
The expansion of the manufacturing sector is one of the South African government's focus areas for economic growth and employment creation. The research on which this article is based identified additional incentives, applicable to the manufacturing sector, which the South African government could introduce to encourage investors to choose the South African manufacturing sector as a desired investment destination. The incentives provided to manufacturing companies by the governments of Malaysia and Singapore and those provided by the South African government are compared in order to examine the similarities and differences between these incentives. In the light of these findings, recommendations are made for additional incentives in South Africa to promote investment in South African manufacturing companies and reduce some of the barriers that prevent local and foreign investment in the country.
Who provides corporate social responsibility (CSR) assurance and what are the implications of the various assurance practices?Author Barry AckersSource: Journal of Economic and Financial Sciences 8, pp 125 –144 (2015)More Less
Independent assurance improves the credibility of corporate social responsibility (CSR) disclosures by providing stakeholders with confidence about the veracity of CSR disclosures and attempts to ameliorate the risk of unscrupulous companies falsely reporting their CSR performance. This article establishes the prevalence of CSR assurance by the 200 largest JSE-listed companies for the period ended 2011/2 (the year after King III became effective), in terms of the assurance provider, the assurance standards, the assurance report components and assurance opinions. Within this context, this article specifically focuses on the role of the audit profession. The article concludes that the rate of growth in CSR assurance by auditors is surpassed by that of non-auditor assurance providers. Whereas reporting companies may use auditors for CSR assurance due to the perceived credibility and strong brands of the auditing profession, enhanced by rigorous assurance methodologies, they may use non-auditor assurance providers due to the higher assurance levels provided and reduced costs.
An evaluation of the income tax treatment of client loyalty programme transactions by South African suppliersAuthor Sophia BrinkSource: Journal of Economic and Financial Sciences 8, pp 145 –164 (2015)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. Despite the fact that client loyalty programmes have been prevalent in South Africa since the 1980s, the South African Revenue Service has issued no specific guidance on the income tax treatment of client loyalty programme transactions. The main objective of the research was to determine whether South African client loyalty programme suppliers treat client loyalty programme transactions correctly for income tax purposes. In order to meet this objective, available local and international literature were analysed to determine the proposed income tax treatment of a client loyalty programme transaction expenditure incurred by supplier for purposes of the client loyalty programme. The proposed correct income tax treatment was compared with a survey circulated to a population of client loyalty programme suppliers in South Africa. The comparison indicated that in practice the Income Tax Act No. 58 of 1962 is treated differently from the proposed treatment. This incorrect tax treatment could result in possible financial loss to the client loyalty programme supplier as taxpayer.
Author Andrie SchoombeeSource: Journal of Economic and Financial Sciences 8, pp 165 –184 (2015)More Less
Access to basic financial services is one possible path leading to a better life for the poor. This is endorsed by SADC governments, and various strategies were in the past decade implemented to advance financial access. South Africa was particularly successful in enhancing access via its government-incentivised Mzansi entry-level bank account. This study researches what happened in the other SADC countries and specifically the role governments played in lifting the barriers to access to and use of formal banking services. It is concluded that no other SADC country was as successful as South Africa.
Helping South Africans achieve a better income in retirement : a critical evaluation of the impact of treasury proposalsAuthor Jesse De BeerSource: Journal of Economic and Financial Sciences 8, pp 185 –202 (2015)More Less
Retirement income security is an issue relevant to the majority of South Africans, many of whom are financially inexperienced and illiterate. South Africa has a sophisticated retirement industry offering a very wide range of choice of annuity products, but these are often not designed to optimise choices by rather unsophisticated investors. This article provides an overview of issues in the South African income withdrawal market, as well as policy remedies proposed by National Treasury to deal with these issues. The aim of this paper is to provide a critical analysis of these policy proposals, using a behaviourally informed framework to financial regulation (Barr, Mullainathan & Shafir, 2008). It recognises that policy remedies need to take into account the realities of how people make retirement income decisions, and how the institutional environment impacts on this. The results of the research suggest that the main policy proposal - simplifying the retirement income withdrawal landscape through the use of default options - is only a partial solution to the problem of unsophisticated consumers who must make several challenging decisions. The research contributes to the literature by providing a more complete, integrated view of the factors that shape retirement income withdrawal decisions and offers practitioners several insights into appropriate reform of the retirement income market.
Source: Journal of Economic and Financial Sciences 8, pp 203 –222 (2015)More Less
The death tax debate has been going on for a long time, with opponents and proponents of death taxes citing various reasons for retaining, amending or abolishing the taxes and no obvious answer coming to the fore. This study conducted a search for alternative taxes that could replace death taxes. The search transcended national borders in order to identify possible solutions to this age-old problem. The suitability of the alternatives (in the eyes of both the opponents and proponents of death taxes) was measured by comparing the advantages and disadvantages associated with each alternative identified to the advantages and disadvantages associated with death taxes. This study further evaluated whether any of the identified alternatives would be suitable for South Africa. It summarises the available alternatives, their advantages and disadvantages. It also concludes that extensive further research is required to arrive at an optimal solution for South Africa.
Source: Journal of Economic and Financial Sciences 8, pp 223 –242 (2015)More Less
This study evaluated the economic impact of hunting on the regional economy of South Africa's Limpopo Province. Data on biltong hunting was derived from a national survey conducted in 2009 and data on trophy hunting from the Professional Hunting Association of South Africa (PHASA). Using the input-output (social accounting matrix) and multiplier analyses, we found that the direct economic impact of hunting in the regional economy of the Limpopo Province, as a result of increased expenditure, exceeded R669 million (US$83.6 million). This direct impact resulted in a total economic impact in the order of R1.2 billion (US$150 million) and consequently in a multiplier effect of 1.76. With regard to employment, we estimated that some 8 382 jobs, in addition to those of the employees directly involved, may be dependent upon hunting in the province, which supports the notion that this is a viable and important sector of the tourism industry.
Source: Journal of Economic and Financial Sciences 8, pp 243 –260 (2015)More Less
This study attempts to clarify whether using a hybrid model based on non-financial variables and financial variables is able to provide a more accurate company financial distress prediction model than using a model based on financial variables only. The relationship between the model test results and the De la Rey K-Score for the subject companies is tested, employing Cramer's V statistical test. A movement towards a Cramer's V value of one indicates a strengthening relationship, and a movement towards zero is an indication of a weakening relationship. Against this background, further empirical research is proposed to prove that a model combining financial variables with true non-financial variables provides a more accurate company distress prediction than a financial variable-only model. The limited evidence of a strengthening relationship found is insufficient to establish the superiority of the proposed model beyond reasonable doubt.
Source: Journal of Economic and Financial Sciences 8, pp 261 –280 (2015)More Less
Investors partake in the risk of a company, in expectation of a return on investment which is in accordance with the company's risk profile. Due to recent corporate failures, which are partly attributable to insufficient risk management, a call by investors for enhanced risk-related disclosure resulted in the publication of various international standards and guidelines on best practices for risk disclosure. This study compiled a disclosure index from these standards and guidelines in order to serve as a disclosure-enhancing tool for the management of South African companies. This index was subsequently used to investigate current practices exhibited by top listed companies in South Africa. Disclosure practices by these companies indicate that there is scope for improvement in risk- and risk-management-related disclosure by these companies.
Author Waldette EngelbrechtSource: Journal of Economic and Financial Sciences 8, pp 281 –304 (2015)More Less
In terms of the new Dividends Tax, which came into effect on 1 April 2012, Dividends Tax may be the liability of the beneficial owner of the dividend. This makes it important to correctly identify the beneficial owner. The term beneficial owner is specifically defined in section 64D of the Income Tax Act No. 58 of 1962 as 'the person entitled to the benefit of the dividend attaching to the share', yet a distinct difference remains between the legal ownership and economic ownership of the share. Within a South African context, determining the beneficial owner within a discretionary trust might be problematic. The trustees are the legal owners of the shares, whilst the beneficiaries might be the economic owners of the shares. Further, consideration has to be given to the timing of the dividend distribution. This article formulates steps to determine which person is entitled to the benefit of the dividend attached to the share.