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- Meditari : Research Journal of the School of Accounting Sciences
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- Volume 13, Issue 2, 2005
Meditari : Research Journal of the School of Accounting Sciences - Volume 13, Issue 2, 2005
Volume 13, Issue 2, 2005
EVA versus traditional accounting measures of performance as drivers of shareholder value - a comparative analysisAuthor J.H.v.H. De WetSource: Meditari : Research Journal of the School of Accounting Sciences 13, pp 1 –16 (2005)More Less
Several researchers and practitioners, notably Stern Stewart Consulting Company and Associates, have claimed that economic value added (EVA) is superior to traditional accounting measures in driving shareholder value. Other researchers have refuted these claims by supplying data in support of traditional accounting indicators such as earnings per share (EPS), dividends per share (DPS), return on assets (ROA) and return on equity (ROE). This study endeavoured to analyse the results of companies listed on the JSE Securities Exchange South Africa, using market value added (MVA) as a proxy for shareholder value. The findings do not support the purported superiority of EVA. The results suggest stronger relationships between MVA and cash flow from operations. The study also found very little correlation between MVA and EPS, or between MVA and DPS, concluding that the credibility of share valuations based on earnings or dividends must be questioned.
Environmental reporting disclosure in South Africa : a comparative study of the expectations of selected groups of preparers and usersSource: Meditari : Research Journal of the School of Accounting Sciences 13, pp 17 –33 (2005)More Less
This study measures and compares the expectations of two different groups - the first is selected preparers of environmental reports (ERs) in South Africa (companies and professional environmental consultants), and the second is selected users of ERs (this included environmental activists, pressure groups and non-governmental organisations [NGOs] with environmentally related objectives). The study considers the perceived importance of environmental reports, the areas that are reported on and the levels of disclosure. It compares and contrasts the expectations of the above groups. The study found significant differences between the expectations of the groups. Predictably, the responses of the users showed expectations of higher levels of disclosure than those of professional environmental consultants, who in turn expected higher levels of disclosure than company respondents. Significant differences were found between the responses of the groups with regard to the importance of specific areas of environmental disclosure. The study shows that there is evidence of a gap between the expectations of the different groups, and hence that there is a need for improved environmental reporting in South Africa.
An empirical analysis of career choice factors that influence first-year Accounting students at the University of Pretoria : a cross-racial studyAuthor J.E. MyburghSource: Meditari : Research Journal of the School of Accounting Sciences 13, pp 35 –48 (2005)More Less
This cross-cultural study examined the career choices of Asian, black and white students at the University of Pretoria to identify the factors motivating Accountancy students to become chartered accountants (CAs), as only 2.5% (609) of 24 308 registered CAs in South Africa in 2005 were black, and only 6% (1573) were Indian. Understanding the attitudes and the perceptions of CA first-year students (identifying key career choice factors) can help course administrators/curriculum designers (the South African Institute of Chartered Accountants (SAICA) and the Public Accountants and Auditors' Board (PAAB)) to align marketing and recruiting strategies with specific personal occupational preferences of different racial groups enrolled for local CA courses.
Factors such as decision time-frame of career choice, socio-economic background, students' perceptions of the benefits/constraints of the CA profession, and other jobrelated factors, were analysed. Students attributed their career choice to their school Accounting performance. Most chose this career in Grades 8 to 11. All three groups like the availability of employment as a CA. Constraints were the cost of qualifying (according to black students), and the difficulty of qualifying (Asian and white students).
Source: Meditari : Research Journal of the School of Accounting Sciences 13, pp 49 –66 (2005)More Less
The South African government is restructuring tertiary education, and subsidies to universities that do not build and strengthen their research capacity will be severely restricted. Hence, academics must publish more research.
This study used a questionnaire to gauge the personal opinions and perceptions of and attitudes towards research held by South African Accounting academics. The questionnaire was based on international debates and discourses on Accounting education and research that suggest factors that might affect research production and consumption, and on informal discussions with colleagues in the discipline. Tertiary institutions can use this constructive information to build a research culture and improve research output among these academics, by changing perceptions where needed and empowering Accounting academics to conduct research.
The results indicate that the main limitations to research output are inadequate qualifications and a lack of skills with regard to conducting research (only 10% of the respondents possess a doctoral degree), insufficient time for conducting research, financial factors, a lack of mentorship and departmental support, and difficulty finding research topics. The debate on 'teaching versus research' is also ongoing.
Author C.E. RabinSource: Meditari : Research Journal of the School of Accounting Sciences 13, pp 67 –88 (2005)More Less
Smith (2003) responded to the Sarbanes-Oxley Act by suggesting that government rules and regulations cannot preserve a profession where people lack integrity. He suggests that leaders in the profession and academe "call individuals to excellence" and "inculcate in practitioners and students ethical behaviour and personal integrity".
This study investigates whether auditors' attitudes towards creative accounting are associated with ethical judgement, their evaluation of the quality of financial reporting and their perceptions of factors that influence preparers of financial statements to use aggressive accounting techniques. The results of this study reveal a significant relationship between auditors' assessments of the relevance and reliability (but not ethical judgement) of reported information and their attitudes to creative accounting. Some insight is gained into auditors' perceptions of the factors that influence preparers to use creative accounting in South Africa.
Source: Meditari : Research Journal of the School of Accounting Sciences 13, pp 89 –106 (2005)More Less
This article investigates the most appropriate accounting treatment for expensing the fair value of employee share options (ESOs) in financial statements. The debate centres around whether the grant date or the exercise date is the most appropriate date for determining the value at which the ESOs are eventually accrued within the financial statements. After examining accounting models for each of the above measurement dates, the article concludes that exercise date accounting best reflects the economic substance of the ESO transaction. Therefore, the IASB should consider revising its definition of equity to encompass only existing shareholders, leaving all other financial obligations to be classified as liabilities.
A study of the ethical views of final year South African accounting students, using vignettes as examplesSource: Meditari : Research Journal of the School of Accounting Sciences 13, pp 107 –128 (2005)More Less
The aim of this paper is to gauge the ethical views of male and female final year Accounting students in South Africa and to compare the results with similar studies performed in Australia and Ireland. The study also discusses the desirability of including an ethics course in the Accounting curriculum as a strategy to improve the ethical standing of the accounting profession.
The most important self-reported factor that influenced students' ethical behaviour was the fear of getting caught. It was recommended that professional accountancy bodies should be more transparent in respect of their disciplinary procedures in order to discourage unethical behaviour. Ethics training initiatives should also address whistleblowing, and whistleblowing should be encouraged. Furthermore, universities should integrate ethics more fully into all courses in the Accounting curriculum of prospective professional accountants.
Students' perceptions of the usefulness of an annual report project for the development of skills and knowledgeAuthor L. StainbankSource: Meditari : Research Journal of the School of Accounting Sciences 13, pp 129 –144 (2005)More Less
This study looks at an annual report project that simulates a real-life situation to encourage students to integrate knowledge, develop skills and values appropriate to self-directed enquiry and research, use technology, work in groups and be active participants in the learning process, question, seek answers and learn independently. Students selected the annual report of a Top 150 JSE-listed company and answered questions on aspects of financial and managerial accounting, auditing and finance.
A questionnaire investigated whether project participation enhances skills (such as judgment, interpretative, listening and problem-solving skills) and abilities (such as thinking critically, asking pertinent questions, organising). There were significant differences in students' perceptions, including gender and language differences.
The results show accounting educators using such projects which skills and knowledge areas need to be addressed elsewhere in the curriculum and whether to include such a project in their programmes.
Source: Meditari : Research Journal of the School of Accounting Sciences 13, pp 145 –166 (2005)More Less
This article examines the relationship between board structure and the intellectual capital performance of South African publicly listed companies. Board composition was analysed in terms of gender and ethnic diversity, using cross-sectional multiple regressions. The population of the study included all South African companies listed on the JSE Securities Exchange during 2003. The final sample, after the transformation of the data, consisted of 117 companies. The empirical results indicated a positive significant relationship between the percentage of ethnic members on the companies' boards of directors and intellectual capital performance. Based on the results of this study, it is argued that South African publicly listed companies may be able to enhance their intellectual capital performance by using an ethnically diverse board of directors.
Source: Meditari : Research Journal of the School of Accounting Sciences 13, pp 167 –188 (2005)More Less
It is commonly acknowledged that "what gets measured gets done". There is some debate on how to include human capital on the balance sheet, but it is arguably more important that investors become aware of how human capital contributes to the success of a business. This is an exploratory study into the reporting of human capital. Annual reports from 20 companies in three different industries were examined for two years to document the human capital reporting that is done. The data were categorised into functional areas, and linkages were constructed with strategic frameworks as well as with operational results. The results showed little evidence that managements report on human capital in a manner suggesting it is an area of strategic importance. A review of the lessons learned from this exploration provides strong guidance for future research.
Author S.P.J. Von WiellighSource: Meditari : Research Journal of the School of Accounting Sciences 13, pp 189 –201 (2005)More Less
Audits of long-term insurers are complex, high-risk engagements. The auditor's consideration of materiality has a direct impact on the quality of such audits. So far, however, no research has been published on the application of materiality in audits of long-term insurers.
This study examines various aspects of planning materiality in the audits of listed South African long-term insurers on the basis of responses to a questionnaire, taking into account issues identified from the literature reviewed. A number of recommendations are made on the basis of the findings. Largely on the basis of the results of this study, the South African Institute of Chartered Accountants has commissioned a project to revise existing guidance for auditors.