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- Volume 8, Issue 3, 2015
Journal of Economic and Financial Sciences - Volume 8, Issue 3, 2015
Volume 8, Issue 3, 2015
Source: Journal of Economic and Financial Sciences 8, pp 709 –727 (2015)More Less
Financial planners often manage volatility believing that it is the same as managing risk. The FTSE/JSE Top 40 Index (Topi) and the FTSE/JSE All Share Index (Alsi) were used as samples to investigate volatility and risk in equity investments. A target return was determined as a benchmark for required return. The volatility analysis indicated that investments in the Topi and the Alsi were too risky for a retirement portfolio. Five sets of actual investments in the Topi and Alsi were then simulated. The internal rate of return (IRR) of each investment was determined and compared with the target return. This revealed that the risk of each of the five simulated sets of investments was acceptable for a retirement portfolio. It was concluded that volatility analysis of monthly returns was not suitable to determine the risk of equity investments in retirement portfolios.
Author Nadia RhodesSource: Journal of Economic and Financial Sciences 8, pp 728 –741 (2015)More Less
This article reports on the transformative design principles that were generated during the process of better aligning accounting education with accounting practice. Managing the risk of a disparity between accounting education and practice by matching the dynamics of the workplace and education arena could create value for the accounting graduate and the employer. In the process of change necessary for the integration of accounting software skills in accounting education transformation design principles were identified as imperative ground rules. The development and conceptualisation of the transformation design principles were drawn from iterative cycles, unique coding and analysis from the infusion of two research methods. The infusion of the two research methods contributed to the development of the transformative design principles, which led to the reform of accounting education in higher education. The transformative design principles developed are demonstrated to have generic properties that could be applied to other environments.
Stock market returns and exchange rate movements in a multiple currency economy : the case of ZimbabweAuthor Mabutho SibandaSource: Journal of Economic and Financial Sciences 8, pp 742 –752 (2015)More Less
This study seeks to provide new evidence on the stock market and exchange rate relationship in Zimbabwe, a country that does not have its own sovereign currency. The bivariate vector autoregressive approach is used to establish the relationship between the stock market and exchange rates. The results show that no relationship exists between the stock market and the proxy exchange rate. The findings contradict the expectation that exchange rate movements would influence domestic stock market prices. This finding is especially interesting given the fact that Zimbabwe uses a basket of currencies for transacting purposes, albeit with the United States dollar as a major currency for reporting and stock market pricing purposes. The findings provide new evidence of a disconnect between the stock market and exchange rate movements. This has implications for international portfolio diversification and the use of foreign currency as an asset class in an economy using a multiple currency system.
Post-konstitusionele regspraak oor die wysiging van diskriminerende bepalings in testamentêre trusts met 'n liefdadigheidsoogmerkAuthor Henda SteynSource: Journal of Economic and Financial Sciences 8, pp 754 –772 (2015)More Less
Die testamentêre trust as sui generis regsfiguur speel 'n belangrike sosiale rol in die Suid-Afrikaanse reg. Die gewildheid van hierdie instelling as boedelbeplanning meganisme het aansienlik toegeneem, deels as gevolg van die beskerming wat aan die testateur se afhanklikes gebied word en deels as gevolg van die eenvoudige, dog doeltreffende praktiese werking daarvan. Een van die groot voordele van 'n Testamentêre trust is die gemak waarmee 'n erflater se wense, soos vervat in sy/haar testament, geïnterpreteer en geïmplementeer kan word. Daar is in ons reg 'n besliste wisselwerking tussen die erfreg en die trustreg van toepassing op testamentêre trusts. Die beginsel van testeervryheid is 'n konsep wat in die Suid-Afrikaanse reg met die nodige respek behandel word en alhoewel dit onderhewig is aan sekere gemeenregtelike en statutêre beperkings, is die aanvaarde siening dat daar effek gegee sal word aan die wense van 'n testateur soos uitgedruk in sy / haar testament. Die bestaande politieke en sosiale omgewing in Suid-Afrika, soos wat onderskryf en vervat word in die Grondwet van die Republiek van Suid-Afrika (hierna verwys as die Grondwet), plaas egter 'n groter beperking op die reg op individuele testeervryheid. Die huidige tendens bestaan dat indien 'n Testamentêre trust geskep word en 'n openbare instelling soos 'n universiteit betrokke is, die testamentêre trust gewysig sal word indien enige van die bepalings daarin vervat geklassifiseer kan word as om diskriminerend van aard te wees. Hierdie artikel fokus op die evaluering van die ratio decidendi van die howe in onlangse hofuitsprake. Dit sal die neiging beklemtoon dat al die howe van dieselfde mening is dat die sogenaamde "diskriminerende bepalings" in testamentêre trusts met 'n liefdadigheidsoogmerk gewysig moet word, maar dat die howe se interpretasie van die feite met betrekking tot die verskillende toepaslike areas in ons reg wissel van geval tot geval. Dit sal duidelik aantoon dat die tyd aangebreek het vir 'n spesifieke stel reëls, wat konsekwent toegepas kan word - 'n grondwetlik gebaseer boni mores kriteria om eenvormigheid en regverdigheid te verseker, en dat die huidige status quo nie aanvaarbaar is, slegs omdat dit die gewenste resultate lewer nie.
An analysis of post-constitutional case law relevant to the amendments of discriminatory provisions in charitable testamentary trusts
The testamentary trust as sui generis legal figure plays an important social function in South African law. The popularity of this institution as estate planning mechanism has increased considerably, partly because of the protection given to the testator's dependants and partly because of the simple, yet effective, practical working of it. One of the major benefits of a testamentary trust is the ease with which a testator's wishes, as contained in his/her will, can be interpreted and implemented. The Charitable testamentary trust has even more unique characteristics and due to its aim - a charitable intent, it has the effect that South African courts are struggling to reconcile the different elements of existing legal principles in amending these types of trusts. It is the generally excepted approach that charitable testamentary trust will not summarily be declared invalid if the trust purpose or beneficiaries are not clearly defined. Our courts have a certain amount of freedom of interpretation - although not absolute - in these cases and they can look at the facts of each case to determine the aim of the trust. (Corbet at al., 2001:430)
The charitable testamentary trust has a trifecta of legal fields relevant to govern it. There is a close interaction between the law of succession and the law of trusts applicable to testamentary trusts as well as some common law principles that must be applied.
The determinants and measurement of trust in tax authorities as a factor influencing tax compliance behaviourAuthor Marina BornmanSource: Journal of Economic and Financial Sciences 8, pp 773 –790 (2015)More Less
To trust is to believe that another person will cooperate for your benefit and will not take advantage of you if an opportunity to do so arises. Trust is valued as a relational variable providing the base for voluntary cooperation. This article aims to determine, by reviewing studies on the effect of trust in tax authorities on tax compliance, the determinants, effect and measurement of trust in this context. Findings from a number of studies indicated that trust in tax authorities is positively related to tax compliance, and it was found that perceptions of fairness, treatment by authorities, norms and attitudes, and subjective tax knowledge are the main factors determining trust in tax authorities. However, many studies use very limited descriptors when measuring perceptions of trust in authorities, and it is suggested that a standardised survey instrument could be developed to measure such perceptions.
Source: Journal of Economic and Financial Sciences 8, pp 791 –807 (2015)More Less
In a society the tax climate is determined by the interaction between taxpayers and tax authorities. In a 'service and client' climate, taxpayers do not expect authorities to automatically suspect them of being tax evaders. Evidence suggests that recognising good tax behaviour with strategies of rewards has a positive effect on voluntary tax compliance. Principles derived from the cognitive evaluation theory predict that when feelings of competence are affirmed and this is accompanied by a sense of autonomy it can enhance the intrinsic motivation for an action. The present research surveyed the attitudes and beliefs of taxpayers involved in small business on being rewarded for tax compliance. Results were corroborated with the principles of the cognitive evaluation theory and it was found that that the principles of the theory are applicable to rewarding tax compliance behaviour.
Non-recognition of internally generated brands : implications for the usefulness of financial statementsSource: Journal of Economic and Financial Sciences 8, pp 808 –822 (2015)More Less
International Accounting Standard 38 (IAS38) prohibits the recognition of internally generated brands as assets. This article explores the implications of this prohibition for the usefulness of financial statements, focusing on the implications for note-disclosure. A theoretical doctrinal research approach is taken in which the literature on intangible assets and current accounting standards is examined and evaluated. The article highlights the information content relevant to unrecognised brand assets that is not currently disclosed to users of financial statements. Furthermore, the article argues and explains how this situation may compromise the usefulness of financial statements. Practitioners compiling financial statements may find the conclusions and recommendations useful in improving voluntary note-disclosure when a reporting entity owns significant unrecognised brand assets. The International Accounting Standards Board (IASB) may find the article useful in reviewing IAS38's mandatory note-disclosure requirements in order to improve the usefulness of financial statements.
Author Ellane Van WykSource: Journal of Economic and Financial Sciences 8, pp 823 –842 (2015)More Less
Environmental policy integration is essential in achieving environmental sustainability goals across non-environmental sectors. Dilution of environmental goals in environmental policy integration should be avoided. The conservation tax incentive of the repealed section 37C(5) read with section 18A of the Income Tax Act 58 of 1962, replaced by section 37D, represents environmental policy integration in tax legislation. The study primarily aimed to determine whether the replacement will benefit contracted landowners, using historical comparative methodology. Secondarily, a historical review of the literature on environmental policy integration and alternative incentives for private conservation efforts was performed. Although contracted landowners might obtain a smaller tax benefit annually, they will receive the same total tax benefit over the entire period of the deduction. They will have certainty regarding their annual tax benefit. As certainty is preferred by most landowners, the study concluded that dilution of environmental policy integration goals will not result from the amended legislation.
Source: Journal of Economic and Financial Sciences 8, pp 843 –860 (2015)More Less
Arguments about money represent one of the most common reasons for divorce. South African and several Western cultures consider communication about money as uncivil and taboo - even more so than sex and death. The aim of this investigation is to determine newly married couples' views of gender roles in marriage with regard to financial management. Various factors can lead to personal financial problems and marital problems, namely financial illiteracy, financial phobia, low income, an excessive standard of living, compulsive buying and indebtedness. In general, men are more confident with regard to financial management, a phenomenon that is also confirmed by the results of this study. This was a quantitative study and questionnaires were distributed amongst couples that have been married for less than 10 years. Both spouses had to complete a questionnaire, and in order to ensure frankness they were requested not to share their answers with each other. The results show that both genders consider men to be superior concerning financial behaviour. The women indicated that they are not as self-confident with regard to their own ability and knowledge of financial management, despite major advances in the empowerment of women and the fact that many women are breadwinners in their homes. The indication by men that they have little faith in their wives' abilities to discern between luxuries and essentials was statistically significant. The sensitivity of the topic was once again emphasised by, in particular, the strong reaction from men about the completion of the questionnaires. Future research in this domain is essential, but it is recommended that anonymity be regarded as a critical point in gaining a larger response rate.
Source: Journal of Economic and Financial Sciences 8, pp 861 –874 (2015)More Less
The purpose of the article is to explore the VAT practices of mobile telecommunication service providers in South Africa. First, literature dealing with the general VAT principles in South Africa such as the VAT Act No. 89 of 1991 and that of other countries was considered, where after the Melbourne Agreement, which specifically deals with the VAT on international telecommunication services, was considered. As the provisions of the general VAT principles as portrayed in the VAT Act (89/1991) and those of the Melbourne Agreement differ, the tax managers at three major South African telecommunication service providers were interviewed to determine which principles they apply in practice. From the interviews conducted, it was clear that South African telecommunication service providers apply the principles of the Melbourne Agreement and levy VAT at 14% on international telecommunications services provided to its customers and VAT at 0% to foreign network operators for services rendered to non-residents while in South Africa. This is, however, contrary to the normal VAT principles that a service is zero-rated when a service is exported and consumed outside of South Africa and VAT levied at 14% when the service is provided to a non-resident present in South Africa at the time the service is rendered.
Source: Journal of Economic and Financial Sciences 8, pp 875 –889 (2015)More Less
The threats of climate change have compelled humans to consider the environmental impact of their decisions, including those relating to agricultural practices. Organic agriculture is believed to be a mitigating factor when it comes to climate change. This article explores the perceptions of organic farmers regarding the benefits of organic agriculture, from a financial and non-financial perspective. It also highlights the trade-off between the perceived non-financial and financial benefits of organic agriculture. A convenience sample of 26 farmers was obtained. The utility of a convenience sample was necessary due to the unavailability of a complete database of organic farms in South Africa. Results indicated that the perceived non-financial benefits of organic agriculture were considered to be the most important consideration for the decision to farm organically. The results confirmed and augmented those found by other authors, namely that the environmental benefits of organic agriculture were considered to be very important to organic farmers.