bluuebunny/crossref_metadata_2025 huggingface dataset:
The measurement of risk
Authors: Retief J. L.R. , Hamman W. D. , Affleck-Graves J. F.
Published: August 2019

Risk has so permeated the financial community that no one needs to be convinced of the necessity of including risk in investment analysis. Although the accounting profession has accepted that the purpose of accounting is to facilitate decision-making, implementation of this approach within financial-statement preparation has been impeded by an inability to specify the decision processes of external users of accounting data. Past research, however, provides some empirical knowledge of the decision processes of the investor in a company's shares. This study extends that research in terms of its implications for accounting. The accounting system generates information on several relationships considered by many to be measures of risk. Previous research suggests that financial-statement ratios can be used as measures of default risk, but little is known of their association with risk as defined by the beta coefficient in the capital asset pricing model, generally known as the market model. The problem is compounded by the fact that the capital asset pricing model specifies its risk measures solely in terms of market interactions (i.e. share price variables). An important issue is the relationship between the accounting-determined and market-determined measures of risk. This article investigates this relationship, utilizing a sample of companies from the Johannesburg Stock Exchange, and compares results with those of similar studies conducted in the USA.
Bureaucracy and the need for entrepreneurship in South Africa
Authors: Human P.
Published: August 2019

The growth of bureaucratic organization is seen as a characteristic inherent in capitalism. The concentration of economic power in South Africa is used as a measure of the extent of bureaucratization in this country. It is argued that this development is increasing and that such a development is structurally determining bureaucratic ways of thinking. Such an ethos is dysfunctional to the vitality of economic development; this problem thus warrants our attention. It is suggested that the entrepreneurial spirit is the prime mover in economic development; this way of thinking is, moreover, described and explained. It is further suggested that this way of thinking could be promoted and certain methods are proposed. It is, however, argued that much of the attention given to the entrepreneur has been misdirected to sectors of the economy which are in fact peripheral to economic development. The development of the small business sector is certainly of some importance; this sector cannot, however, solve our major problem, and that is the lack of real vitality of big business which grows by take-overs and mergers rather than by producing and distributing more wealth. This shortcoming, it is argued, is a function of the reproduction of the bureaucratic way of thinking.
Managerial attitudes towards corruption: A pilot study
Authors: Pitt L. F.
Published: August 2019

This is basically a preliminary study on the measurement of attitudes vis-a-vis deviant behaviour (corruption). Respondents have been presented with a series of scenarios which reflect fraudulent or deviant practice. Respondents were asked three questions: (i) Their own disapproval of such practice; (ii) how they perceived friends and colleagues to view such practices; and (iii) how they anticipated that management would respond to such practices. The study was conducted with a sample size of 149 respondents. While most generally condemned corrupt practices, the perceived participation of the peer group was higher than expected. Legal action was not perceived as appropriate, and top management was considered to be responding only to the more severe transgressions.
A priority criterion for serial computer system development projects
Authors: Mende J.
Published: August 2019

When a firm's systems department has insufficient resources to carry out all requested development projects immediately, managers serving on the Data Processing Steering Committee need to decide which project should be completed first, second, third, etc. This can be done by ranking the projects in sequence of a 'priority criterion'. In the past net present value (NPV) was used for this purpose. However, in a small systems department, where projects are carried out in series, NPV is inappropriate. A more accurate measure of priority is a project's 'net worth' divided by its duration.
The economic disturbance theory and the merger activity in Britain: An empirical investigation
Authors: Pouris A.
Published: August 2019

This article is an empirical exploration of the hypothesis, advanced by Gort (1969), that mergers are the result of disturbed expectations owing to economic and technological shocks. The importance of this theory lies in the fact that it attempts to explain the observed cyclic pattern of merger activity and to provide a link between the neoclassical set of explanations and the timing of mergers. The tests point out that changes in merger rates over time and among industries in Britain are not determined by changes in technology and/or stock prices. Residual contributions are the comprehensive discussion of the availability and sources of data on mergers and stock price indices in the United Kingdom, and an indication, with policy implications, that merger activity may affect the performance of the stock market adversely.
A sensitivity analysis of price formulae
Authors: Doppegieter J. J. , Lambrechts I. J.
Published: August 2019

This is the last in a series of four articles. In the first article two price formulae were discussed and in the subsequent two articles two methods of analysis were demonstrated. In this article a third method of analysis concerning the sensitivity of some selected model parameters is presented. Four parameters have been selected, i.e. the allowed profitability rate, the inflation rate, the growth rate, and the statutory tax rate. The value of each factor has been increased and decreased by 10% to test the sensitivity of each. In both price formulae the allowed profitability rate has the highest relative importance, followed by the inflation rate. Furthermore, in price formula A some parameters have no or only a small short-term effect on the internal rate of return, e.g. the statutory tax rate. In addition, the internal rate of return of formula A is generally more volatile to changes in the variables analysed than that of formula B. This type of analysis could be very helpful for negotiations between price/tariff-determining bodies and price-controlled undertakings/industries.
Faktore by die oorweging van kredietverlening in verbruikersbankwese
Authors: Ackermann P. L.S. , Van Rensburg W. P.J.
Published: August 2019

Factors in considering the granting of credit in consumer banking In this study the authors attempt to identify underlying factors from various evaluation criteria (as observed by bank managers) in considering the granting of credit in consumer banking with regard to the various race groups of the Republic of South Africa. The sample consists of 510 managers from the consumer division of general and commercial banks. With the aid of principal factor analysis six underlying factors are identified with respect to Indians, whereas five underlying factors are identified with regard to coloureds, whites and blacks.
Interdepartmental conflict: The neglected dimension of management
Authors: Bloch B. J.
Published: August 2019

Both the theory and practice of management reflect an overemphasis on the relationships and conflicts within, rather than between such departments as personnel, finance, marketing, and production. The lateral dimension of management which refers to interdepartmental relationships, is not given adequate treatment. This article therefore deals with interdepartmental conflict - its causes and possible solutions. The article is divided into three sections. Firstly, the organizational and behavioural causes of interdepartmental conflict are examined. This refers to the inherent tendency towards conflict created by the balance between autonomy and interdependence of departments in large organizations. Secondly, conflict at departmental interfaces is discussed, i.e. the specific divergences in attitude, perceptions and activities between the most significant pairings of departments, e.g. the relationship between marketing and finance departments. Finally, techniques and imperatives for the minimization of interdepartmental conflict are outlined. Various socio-psychological techniques are described as well as the major elements of management practice needed to resolve conflict at departmental interfaces.
The growth share matrix as a planning tool: Caveats and practical problems
Authors: Robinson C. G.
Published: August 2019

Limitations exist on the naive application of the growth share and growth gain matrices as resource allocation techniques. This, the last in a series of three articles, points out some considerations essential for successful application of the Boston Consulting Group's approach to setting strategy. Thirteen caveats ranging from the breakdown of the implicit correlations between cash flows and market share and market growth rate through motivational and political problems must condition a competent analysis. Practical problems in implementing portfolio planning are highlighted.
The status of the in-house marketing research department in large South African companies
Authors: Pitt L. , Steyn P.
Published: August 2019

Working relations between marketing researchers and managers have merited some attention in marketing literature with particular emphasis on the responsibilities of both parties. In this article the authors report the results of a survey of large South African companies, concerning the level of job satisfaction of marketing research managers; managers' perceptions of in-house marketing research departments; and the perceptions of both parties concerning role expectations of marketing research. Brief attention is also given to the reasons why a majority of companies do not have marketing research departments. Marketing researchers evince a general level of job satisfaction, although there is a measure of dissatisfaction with the procedure for proceeding problems to the research department and also with their role in formulating marketing strategy. Managers mark marketing research departments lower regarding creativity and also on the relevance of marketing research data to decision-making. Significant differences also exist between researchers and managers regarding their role expectations of marketing research. It is evident that these differences in expectations could contribute towards intra-organizational conflict in the marketing department and the recommendation is made that top management give their attention to this matter.
International diversification after 1985: The argument becomes stronger
Authors: Barr G. D.I.
Published: August 2019

The performance of South African traded securities vis-à-vis securities on two overseas stock exchanges is considered in this article. It can be seen how the recent political instability in South Africa and the associated depreciation in the rand have led to dramatic returns, in rand terms, on those overseas markets. It is argued that these large returns on foreign markets may well not be repeated but that the increased risk of South African assets has made the diversification benefit of overseas investment that much greater. It therefore appears that serious consideration should be given to allowing certain institutions to have some holding of foreign assets so as to offer some protection to the real value of South African savings.
The association between market-determined and accounting-determined risk measures in the South African context
Authors: Retief J. L.R. , Affleck-Graves J. F. , Hamman W. D.
Published: August 2019

A key problem in estimating the cost of capital for an unlisted company has been the determination of its beta coefficient. Market prices for such companies are not available, therefore the traditional regression methods for estimation are not possible. Thus, it is necessary for a proxy beta to be determined. In this article an attempt is made to develop such a proxy beta by using eight accounting variables. These accounting variables are shown to be significantly correlated to the market beta for individual companies. In addition, regression analyses are performed to develop an estimation model which will allow the individual company to obtain a proxy beta from its accounting variables. Satisfactory regression equations are developed for both the single share case and the portfolio case. The article is concluded with the presentation of a four-step procedure which will permit managers of unlisted companies to obtain a proxy for their beta and hence to estimate their overall cost of capital. In addition, it is shown that the procedure presented is consistent with the findings of modern portfolio theory.
An investigation into the small firm effect on the Johannesburg Stock Exchange
Authors: De Villiers P. , Lowings A. J. , Pettit T. , Affleck-Graves J.
Published: August 2019

Recent studies on the New York Stock Exchange have provided empirical evidence which suggests that small market capitalization firms outperform large market capitalization firms in terms of share price performance. This appears valid even after adjusting for the additional risk borne by the small firms. This has become known as the 'small firm effect' and questions the validity of many traditional pricing models such as the Capital Asset Pricing Model. In this paper, the small firm effect is examined on the Johannesburg Stock Exchange. The risk-adjusted performance of portfolios comprising large firms is contrasted with that of small firms. Three measures of size are used, namely market capitalization, asset base and traded volume. In all three cases, no evidence of a small firm effect is apparent. Indeed, if anything, the large firms appear to provide superior investment performance on the JSE.
Cognitive socialization: A model for cross-cultural education programmes
Authors: Meyer Margaret I.
Published: August 2019

In recent years many white-dominated organizations have attempted to encourage the development of black potential through special black advancement programmes. The concept of black advancement is contrasted with Africanization, the aim of which would be that blacks should plan and administer education programmes. Often black advancement programmes are based on a systems approach in which needs are identified, objectives set and regular tests administered. It Is assumed that when objectives have been met, the participant is in a position to compete equally with his white counterpart. Often, however, subsequent performance has been disappointing, particularly to sponsors. In this article an approach of cognitive socialization is proposed which takes the student beyond the objectives set and encourages an outcome of quality. The research on which this article is based was undertaken at the University of the Witwatersrand with students in the Undergraduate Cadet Scheme who planned a career in commerce.
Pre-purchase information search and consumer satisfaction: Replication and extension
Authors: Rousseau D.
Published: August 2019

In this paper the author examines consumer satisfaction with major household appliances and its determining factors. Hypotheses relating to pre-purchase information search and product satisfaction as well as previous satisfactory store experiences and subsequent repurchase behaviour are proposed and empirically tested using data from 55 consumers who patronized a large eastern Cape hypermarket. Results imply that product satisfaction is more related to market place variables than actual search behaviour. Repeat shopping intentions are associated with previous shopping experiences at the particular store which also contributes to product satisfaction. Marketing implications and future research directions are briefly discussed.
Die relatiewe belangrikheid van parameters by batevervanging: 'n Sensitiwiteitsanalise
Authors: Reinecke R. , Schmidt F. O. , Badenhorst C.
Published: August 2019

This article reports on a study conducted on several important parameters in a real-life problem of asset replacement. A study of the literature revealed the relevant parameters. A spreadsheet programme was created to find an optimum replacement strategy for fork-lift trucks. This same programme was then used for a sensitivity analysis on the most important parameters. The results of this analysis are discussed in this paper. A short user's manual as well as some notes on the working of the program is included.
Inflation, tax shields and borrowing: Why is the balance sheet of the corporate sector becoming vulnerable?
Authors: Biger N.
Published: August 2019

The en-masse bankruptcies of many corporations in high inflation countries in recent years is attributed partially to the pre-recession high-risk financial planning. This paper elaborates on the type of considerations which govern the financial decisions of local firms in an inflationary environment and shows that the real cost of borrowing, even index-linked or hard currency funds may be very low and even negative. This might happen due to common tax laws. This phenomenon lead many business firms to prefer debt over equity financing. The analysis indicates the kind of risk assessment which South African firms might have to conduct when they formulate their credit and financial policies in a high-inflation environment.
The role of qualitative research in management
Authors: Orpen C.
Published: August 2019

It is argued that there are currently two separate research approaches to behaviour in organizations; the qualitative approach and the quantitative approach, each with their own framework, criteria of proof, and accepted procedures. Reasons for the dominance of the quantitative approach and the renewed interest in the qualitative approach are presented. Implications for future research in organizational behaviour are developed. There is a need for more multi-approach research efforts and for a conceptual scheme that will locate the two approaches in relation to one another.
Leadership styles of senior executives in business and government organizations: A comparative study
Authors: Chitayat G. , Venezia I.
Published: August 2019

This article has two main objectives. First, to analyse to what extent organizational differences affect the basic relationship between style of leadership and power and information. Second, to investigate whether the results (concerning leadership styles) previously obtained for middle and lower level management also hold true for senior executives, and if not, how these should be modified. More specifically, the effects of power and information on the leadership styles of senior executives are examined and compared with those found for lower level managers. For comparison with other studies, the styles chosen for analysis were: directive, negotiative, consultive, participative and delegative. It is shown that the effects of power and information on leadership styles are not the same across organizations. Power is positively correlated with directiveness in business organizations, but negatively correlated with this style of leadership in non-business organizations. The frequency of usage of certain leadership styles is shown to vary across organizations, and the implications of these variations are discussed. It is also demonstrated that the effects of power and information on leadership styles of senior executives do not differ considerably from the comparable effects found on lower level management.
The timing of rights issues on the Johannesburg Stock Exchange
Authors: Bhana N.
Published: August 2019

Although a great deal of trading in rights transactions takes place on the various stock exchanges of the world there is a dearth of empirical evidence which might determine an observable trading strategy related to such transactions. The traditional view is that subscription rights to additional issues of securities will reach their maximum price shortly after the start of trading and then decrease until the end of the subscription period. The results of this investigation into rights issues of companies listed on the JSE clearly rejects the 'sell the rights early' trading strategy. It is observed that there is a considerable number of rights which reach their peak price in the middle and in the final trading period. Empirical evidence presented in this paper reveals three factors that could be used to predict the market price of rights listed on the JSE. All three factors are highly correlated with the market price of rights. Therefore, an evaluation of an observable trend in these factors could be used to advantage by investors engaged in rights transactions.
Perceptions of a selected group of relatively affluent blacks regarding certain aspects of tourism
Authors: Boshoff C. , Du Plessis A. P.
Published: August 2019

Recent international and local developments have had a negative influence on the South African Tourism industry, particularly regarding the number of overseas tourists visiting the country. To compensate, the industry has renewed its interest in local options - particularly the potential and opportunities the black market offers. However, there appears to be a high degree of uncertainty about utilizing its potential. This study is an attempt to gain some insight into the tourism needs and requirements of a particular market segment, namely relatively affluent blacks. The findings reveal that affluent blacks do not exhibit tourism needs which are unique to that particular market segment, but do suggest definite needs and preferences. Information pertaining to these needs is essential for the marketer of tourism to ensure that appropriate marketing strategies are formulated which will allow for proper utilization of opportunities to the advantage of both marketer and consumer.
The performance of conglomerate companies on the Johannesburg Stock Exchange: An empirical evaluation
Authors: Affleck-Graves J. F. , Burt G. H. , Cleasby S. J.M.
Published: August 2019

Existent financial theory is unable to explain whether on aggregate conglomeration is beneficial to either individual shareholders or to the economy. Both advantages and disadvantages can be listed for the conglomeration process and it is thus an empirical question as to whether or not shareholders really benefit from conglomeration. In this paper the long-term profitability of conglomerates is examined in an attempt to determine whether or not such shareholders earn superior returns on aggregate. This is done by contrasting the stock market performance of a sample of South African (S.A.) conglomerates over a six-year period with the performance of the overall market. In addition, their performance is contrasted with that of a random portfolio of non-conglomerate companies. Finally, a pseudo-conglomerate portfolio was constructed for each conglomerate in such a way that each portfolio had the same asset structure as its matched conglomerate. The performance of the conglomerates was then contrasted with that of the pseudo-conglomerate portfolio using market returns, return on assets and return on equity. The results indicate that on aggregate, the conglomerates significantly underperform non-conglomerates. This is consistent with the view that conglomeration is in the interest of management rather than in the interest of the shareholders.
Measuring office productivity
Authors: McDonald T. , Conrath D. W.
Published: August 2019

Many organizations today are caught in the grip of a severe productivity crisis. If there is an urgent need to improve office productivity, there is also a need to be able to measure productivity in a suitable way. All the measures of total office productivity that have been found in the literature, either do not say how to measure the qualitative aspects of the output or how the quantitative and qualitative aspects are to be combined. In this paper a measure is proposed that considers both the effectiveness (quality and timeliness) and efficiency aspects of office output. An overall composite productivity index is provided. We feel that the proposed measure is an advance over current methods of measuring office productivity.
Budgeting in small manufacturing firms in South Africa
Authors: Ford J. C. , Lurie M.
Published: August 2019

This paper reports on a general investigation into budgeting in small manufacturing firms in South Africa. The study was undertaken using 18 semi-formal interviews and 175 questionnaires addressed to the Chief Executive Officers (CEOs) of small manufacturing firms in six industry sectors in the greater Johannesburg region. The 63 usable responses (a response rate of 36%) were analysed using the SAS statistical package. Several results and conclusions were reached. A wide range of budgetary processes and procedures are used by small manufacturing firms. Budgeting is short-term, informal, simple and flexible, and is considered an essential element of management. There is room for much improvement in certain areas of budgeting. Although accounting reports are perceived to be adequate, CEOs may lack the necessary knowledge to develop more effective reporting systems. The degree of budgeting used is probably influenced by the nature of the business, and the background and training of the CEO. CEOs are completely involved in budgeting, but there is little participation by managers and staff. The major benefits of budgeting are perceived to be its use in planning and control, particularly of cash, and the major problems relate to the uncertainty of future conditions.
A comment on 'Take-over announcements and insider trading activity on the Johannesburg Stock Exchange
Authors: Van Den Honert R. C. , Barr G. D.I.
Published: August 2019

No abstract available.
Die kombinering van ekonomiese vooruitskattings in die Suid-Afrikaanse konteks
Authors: Calitz C. B. , Smit E. V.D.M.
Published: August 2019

In the literature on forecasting, consensus has been reached about improved forecasting accuracy brought about by the combination of two or more forecasts for a given variable. No consensus, however, exists about the exact way in which the various forecasts in the combination should be weighed. The evidence points towards simple weighing schemes. The present study utilizes South African macro-economic forecasts published by seven forecasters on eight variables to evaluate the benefits to be gained from combining forecasts and to evaluate the relative accuracy of a number of combination schemes. The results confirm the current views on the combination of forecasts in so far as combining forecasts have led to increased accuracy in forecasting. It further confirms the viewpoint that a simple or weighted arithmetic average of individual forecasts seems to be acceptable as instruments for combining forecasts.
Some characteristics of personal interaction in groups and their effects on performance
Authors: Nel D. , Pitt L. F.
Published: August 2019

The authors report the results of an experimental study on the relationship between five group process variables as an evaluation of the personal interaction between group members playing a computerized business decision game. Specific objectives of the study were to examine the experimental data set to determine if it was of a similar structure of the Green Taber (1980) instrument, and to assess the impact of five process variables on the outcome, or 'success', of the group interaction process, as measured by profit achieved in the business decision game. The results of the study indicate that there seem to be opportunities for negative socio-emotional behaviours such as rejecting others' positions, arguing, and criticizing in a simulated decision-making environment.
Enscaling the mission statement as a procedure for organisational diagnosis
Authors: Kamfer Louis
Published: August 2019

In this article a description is given of how an organisation's mission statement was used as the first step of an organisational improvement intervention. From the mission statement a thirteen-item scale and twenty open-ended questions were developed. The scale was applied to a stratified sample of 664 employees while the questions were used in 107 focus groups. When the mission statement scale scores were analysed, significant differences were found which reflected varying perceptions between organisational levels and divisions of the extent to which the core values of the mission statement were being enacted. Through a content analysis of the focus group responses, majority themes were found which shed light on the origins of the different perceptions. In this way, substantive data, of use to the organisation, were obtained. The findings were submitted to the company's directors, to all managers, and to all shop stewards, in the form of a verbal presentation, which was videotaped, and a comprehensive written report. A summary report was made available to all survey participants. The video was shown on request. Lastly, working sessions were held with each divisional director and his executive team, whereafter various divisional task forces were established to follow through on the findings of the survey. Some of the broader trends have also been related to published research literature. This method of mission statement analysis holds promise as a diagnostic technique for organisational development.
A different perspective on operations systems classifications
Authors: Van Der Walt S. R.
Published: August 2019

The student in the field of operations management often encounters the problem of why and how the management approach of one type of operations system differs from another. In the operations literature these differences are mostly explained by referring to the process structure in the case of manufacturing operations. In the case of service operations the differences are often explained by referring to the differences between services and manufacturing. These explanations are unsatisfactory, particularly in the light of modern technologies, and sometimes emphasise what is being done in the operations system rather than looking at the approach which should be followed or how the generation of the output should be managed. The management approach is more important to the student in this field. The objective of this study is to identify those dimensions or factors that have been used in the literature to describe the nature and management approach of operations systems, to analyse the underlying meaning thereof, and to isolate those dimensions that independently influence the management approach of operations systems.
The effect of inflation on the optimum payback cut-off
Authors: De Villiers J. U.
Published: August 2019

Despite the theoretical criticisms against it, payback is one of the most commonly used methods of investment appraisal in practice. Its ease of calculation and simplicity are seen as its most important advantages. In addition, an unsophisticated method like payback can yield the correct investment decision as long as the correct cut-off is specified. In this paper the optimum payback cut-off and how it is influenced by inflation is studied. Three different methods of calculating payback under inflation are investigated. In all of these the optimum cut-off depends upon the type of assets (current, depreciable or non-depreciable assets) as well as the life of depreciable assets employed. The study shows that the optimum nominal payback cut-off (where the payback calculation is based on inflated cash flows) decreases with increasing inflation for all asset types. The optimum real payback cut-off (based on nominal cash flows adjusted for inflation) does not change with inflation. The optimum uninflated payback cut-off (where inflation is ignored) decreases rapidly with inflation for projects employing current assets. In the paper is shown that complex but systematic relationships exist between a project's payback period and its discount rate. Despite its deficiencies, the use of the payback method is therefore not entirely irrational.
Die invloed van inligtingstegnologie op werkverskaffing in die Suid-Afrikaanse finansiële sektor
Authors: Hom Gideon S. , Wait Charles V.R.
Published: August 2019

The influence or information technology on the provision of employment in the South African financial sectorThe higher levels of productivity in the manufacturing sector, as a result of the automation and other significant changes in production functions, often lead to fears of higher levels of unemployment, as certain types of labour could become redundant. The application of information technology in the form of computers, data banks and telecommunication networks has, to a great extent, contributed to the automation of routine functions, as well as to the integration of various production functions. The danger exists that a great number of workers released from the manufacturing sector are not always trained and suitable for employment in the service sector. In addition, there may not be sufficient employment opportunities to accommodate these workers. The influence of information technology on employment should, however, be considered in terms of the net effect of the three distinguishing effects of information technology on an economy, namely the process, product and organization effects. In South Africa, employment and value added increased in the building society and banking fields during the period 1980-89. Those increases are attributed specifically to the product effect. Since the eighties, banks, building societies and insurance companies have all started to market new and more products that are directly linked to information technology.
Risk, the required rate of return, and aspects of South African management practice
Authors: Paulo S. , Bosch J. K.
Published: August 2019

The pivotal role of the required rate of return to all financial decisions is well documented in the financial literature. However, many misconceptions exist with regard to the specification of the components of the required rate of return. In order to learn more about the possible components of the required rate of return, particularly the different risk premia, empirical information on the determination and use of the required rate of return by South African financial managers was obtained. From the findings of the empirical survey it was evident that the required rate of return is adjusted for a variety of risks. This enables the inference to be drawn that risk adjusted discount rates are being used when taking financial decisions. Further, it is evident that sensitivity analysis and judgemental approaches are used when adjustments are made to the required rate of return.
An empirical relationship between company growth and the market price of securities listed on the Johannesburg Stock Exchange
Authors: Bhana Narendra
Published: August 2019

There appears to be a widespread belief among investors that growth companies and growth stocks are identical. The objective in this article is to determine if the shares of high growth companies listed on the Johannesburg Stock Exchange (JSE) provided superior investment returns during the period 1974-88. The empirical evidence revealed that high growth companies underperform because the market overestimates their future growth and future return on equity, as a result their shares tended to have overvalued price-earnings ratios. Therefore, the investor will incur substantial losses if their results are below expectations. It is hypothesized that a cognitive bias may be responsible for the erroneous identification of growth stocks as shares of growth companies. Company results have a tendency to regress to the mean as the underlying economic forces attract new entrants to attractive markets and leave low-growth businesses. Because of this tendency, companies that have provided high growth in the past may prove to be inferior future investments. Past financial attributes cannot be relied upon to predict future returns. The investor should integrate a rigorous valuation model into the share selection procedure so that estimates of future growth and profitability can be used to make an estimate of expected returns.Dit blyk dat daar 'n algemene mening onder beleggers bestaan dat groeiende maatskappye en groeiende effekte een en dieselfde is. Die doel van hierdie ondersoek is om te bepaal of die aandele van maatskappye wat op die Johannesburgse Effektebeurs genoteer word en wat 'n hoe groei toon, hoer opbrengste gelewer het gedurende die tydperk 1974-88. Die empiriese bevindings dui daarop dat hoegroeimaatskappye onderpresteer, omrede beleggers hul toekomstige groei en toekomstige opbrengste oorskat, met die gevolg dat hul aandele oorgewaardeerde prysverdienste-verhoudings toon. As gevolg hiervan strek dit tot nadeel van die belegger as die uitslae nie aan die verwagtings voldoen nie. Die hipotese word gemaak dat 'n bewussynsvooroordeel moontlik daarvoor verantwoordelik is dat groei-aandele foutiewelik as aandele van groeiende maatskappye geindentifiseer word. Maatskappy-uitslae het die neiging om terug te keer tot die gemiddelde, na gelang die onderliggende ekonomiese kragte nuwe deelnemers na aantreklike markte lok, weg van laegroeimarkte. As gevolg van die neiging mag maatskappye wat in die verlede hoe groei getoon het, swak toekomstige beleggings wees. Daar kan dus nie op voormalige finansiele kenmerke vertrou word om toekomstige opbrengste te voorspel nie. Die belegger behoort 'n streng skattingsmodel in sy keuse van effekte te integreer sodat skattings van toekomstige groei en winsgewendheid gebruik kan word om 'n skatting van verwagte opbrengste te maak.
The link between the quality of mission statements and corporate financial performance: An empirical investigation
Authors: Vosloo O. A.L. , Archer A. A. , Smit E. V.D.M.
Published: August 2019

In this article the potential relationship between the quality of mission statements and the corporate financial performance of companies listed in the industrial section of the Johannesburg Stock Exchange (JSE) is investigated. The mission statements submitted were evaluated by the method of content analysis whereby an ordinal value, MSQI, was assigned to each mission statement. Thereafter companies were ranked in terms of the MSQI values. Financial performance was measured in terms of three variables: average return on equity; average return on assets; and share return. These were calculated over different time intervals depending on how long the company had been operating with the mission statement. Two statistical techniques were employed to test for relationships between the performance variables and the quality of the mission statements (MSQI), namely Spearman's rank order correlations and two-sample analysis of means. The majority of correlation coefficients were negative, although only one was statistically significant. It may therefore be concluded (except for the one exception) that the quality of mission statements is not related to corporate financial performance. Possible explanations for this finding are offered.
The identification of variables which universally and significantly influence the return on assets (ROA) of retail pharmacies in South Africa
Authors: Marx J.
Published: August 2019

A retail pharmacist who wishes to ensure the long-term survival of his or her business in a free enterprise system must make the pharmacy's profitability the prime objective. In South Africa, the profitability of retail pharmacies and, thus, of their continued operation, are threatened by increasing competition among retail pharmacies and from dispensing doctors. Nonetheless, the profitability can be enhanced even in these circumstances by adopting a strategic management approach. The research hypothesis of this article is that there are specific controllable internal strategic management variables which universally and significantly influence the return on assets (ROA) of South African retail pharmacies. Multiple regression analysis was used in the study and it was found that the variance in the ROAs of South African retail pharmacies is explained by several strategic management variables. These are associated significantly (on a 5% level) with pharmacies' ROA and include variables such as the sole proprietorship and the partnership as forms of business organization, the purchase ratio and the analysis of strengths and weaknesses as part of their strategic management. Mark-up pricing and the closed corporation as a form of business organization are negatively related to ROA.'n Kleinhandelapteker wat die langtermyn-voortbestaan van sy of haar ondenreming in 'n vryemarkstelsel wil verseker, moet die winsgewendheid daarvan as primere doelstelling nastreef. In Suid-Afrika word die winsgewendheid en oorlewing van kleinhandelapteke deur toenemende mededinging tussen apteke onderling en deur resepterende geneeshere bedreig. Desnieteenstaande kan die winsgewendheid van apteke gehandhaaf word deur 'n strategiese bestuursbenadering toe te pas. Die navorsingshipotese van hierdie artikel is dat spesifieke, beheerbare interne veranderlikes betreffende strategiese bestuur bestaan, wat die opbrengs op bates (ROA) van Suid-Afrikaanse apteke universeel en beduidend beinvloed. Meervoudige regressie-analise is in die studie gebruik en daar is bevind dat die variansie in die ROA's van Suid-Afrikaanse apteke deur verskeie veranderlikes betreffende strategiese bestuur verklaar kan word. Hierdie veranderlikes toon 'n beduidende verband (op 'n peil van 5%) met die ROA's van apteke en sluit veranderlikes in soos die eenmansaak en vennootskap as ondernemingsvorme, die aankoopverhouding, en die ontleding van sterk en swak punte van die onderneming as deel van strategiese bestuur. Die toeslagmetode van prysbepaling en die beslote korporasie as ondernemingsvorm toon 'n negatiewe verband met ROA.
Seisoenale patrone in die Suid-Afrikaanse kapitaalmark
Authors: Hattingh F. S. , Smit E. V.D.M.
Published: August 2019

Seasonal patterns in the South African capital market In this article the seasonal patterns in daily price movements of the Post Office, Eskom 168 and the RSA bonds are examined and these are compared with three equity indices namely the Gold Index, Industrial Index and Overall Index of the Johannesburg Stock Exchange. Both the South African bond and share markets display significant seasonal patterns. In contrast with international findings, it is shown that seasonal similarities exist between the bond and share markets.
Cash flow statement: Management tool or statutory requirement?
Authors: Lambrechts I. J.
Published: August 2019

The Cash Flow Statement (CFS) had been in use in South Africa since October 1988. It replaced the Statement of Sources and Application of Funds, which had been in use since 1973. In spite of the general acceptance of the benefits of the CFS and its superiority over the Statement of Sources and Application of Funds, there are certain inherent problems. These problems mainly relate to the format of the CFS and its ability to assist in forecasting the survival prospects of an enterprise. In this article the focus is firstly on the format of the CFS and it is compared with the requirement of other guidelines. A revised format is proposed. It also considers the usefulness of the CFS as a management tool in financial decision making. Areas of financial decision making which are considered, are financing, capital investment, dividend and pricing decisions. The final conclusion is that although the CFS could be standardized to a large extent, the same does not apply to the calculation of cash flows for financial decision making in different areas.
Mutually exclusive capital projects: A critique of Fisherian analysis
Authors: Paulo S.
Published: August 2019

In capital budgeting a Fisherian analysis is undertaken to resolve conflicts in rankings which arise when mutually exclusive projects have been evaluated according to the net present value and internal rate of return criteria. Within the literature, the projects which have been subjected to a Fisherian analysis, all have the same required rates of return because the required rate of return is held constant irrespective of the differences in the characteristics of the mutually exclusive projects. The conflict in rankings of mutually exclusive projects is typically ascribed to characteristics such as differences in initial outlay and project life span, disparities in the timing of cash flows, the reinvestment rate assumption, and the difficulties of multiple or no unique internal rate of return when the cash flows are non-conventional. Despite these differences among projects, the same required rate of return is used. The central question which is addressed in this article, is whether the same required rate of return can reasonably be used for the valuation of each of the mutually exclusive projects, as well as when a choice is made from among the mutually exclusive projects. In the discussion this 'conventional wisdom' of a constant required rate of return for both the valuations and the choice of an alternative is questioned, and it is suggested that one of the causes of a conflict in rankings may be the use of incorrectly specified required rates of return. Also presented in this article is a conceptual framework which enables a modified Fisherian analysis.
The relationship between changes in money supply and changes in share prices: The semi-strong form efficiency of the Johannesburg Stock Exchange revisited
Authors: Glass R. D. , Smit E. V.D.M.
Published: August 2019

In this article the semi-strong form of share market efficiency over the period 1978 to 1992 is considered, particularly with regard to information about changes in the money supply. To ensure a rigorous test of market efficiency, monetary growth has been decomposed, into anticipated and unanticipated elements. The All Share Index of the Johannesburg Stock Exchange is regressed against the monetary variables. The test results indicate that lagged changes in anticipated monetary growth are significant in explaining changes in share prices, a finding contrary to the efficient market hypothesis. However, the low coefficients of determination indicate that only a small percentage of the variation in share prices is explained by ex post changes in money supply and consequently the potential for a trading rule to earn superior returns to the market is limited.