Examining consequences of principal-agent and corporate governance interactions in South Africa : a study of FTSA/JSE TOP40 companies

Abstract in Zulu, English and AfrikaansThis study examined the consequences of Principal-Agent and Corporate Governance interactions within South Africa’s FTSE/JSE Top40 listed companies from 2008 to 2016. The study’s objectives were to examine the prevalence of Principal-Agent and Corporate Governance problems, to ascertain potential costs of these problems, to establish their socio-economic consequences, and evaluate the effectiveness of the governance codes. The study is anchored in Principal-Agent theory. Mixed methods methodology was employed, specifically Concurrent and Exploratory Sequential Mixed Methods design logics. The main findings include that, 23.91% of sample companies experienced Principal-Agent and Corporate Governance problems- significantly exceeding the study’s expectations that negligible governance problems exist and reveals the pervasiveness of these problems; executive compensation plays a bigger role in exacerbating Principal-Agent and Corporate Governance problems than expected and often considered in governance mechanisms; multi-billion rands potential costs are ascribed to Principal-Agent and Corporate Governance problems incurred by principals; unjustifiable salary inequalities resulting in other inequalities that build social mistrust; and there is limited conviction that current governance codes are effective. This study’s contributions include; proposing an executive remuneration model that considers governance of the company in determining executive compensation; formulating a governance index calculated based on King III and King IV recommendations to standardise the measurement of the quality of governance in companies; the salary Gini was used to establish compensation gaps and red-flag potential Principal-Agent problems and flaws in governance systems; and used value at risk procedures to quantify potential Principal-Agent and Corporate Governance costs. The main theoretical implications of the study’s findings are; agency theory needs extension to capture socio-economic costs and not only focus on the principal; remuneration models should consider the executive’s company governance and social and economic egalitarianism; flexibility of ‘comply or explain’ should subordinate socio-economic consequences, suggesting a hybrid approach which makes certain governance code provisions compulsory; and finally, behavioural finance theories should be used in governance research for better insights.Lolu cwaningo lwacubungula futhi lwahlolisisa imiphumela yokuxhumana phakathi kwesimo seNhloko ne-Ejenti, i-Principal-Agent, (lapho umuntu eqoka omunye ukuba athathe izinqumo kanye/noma izinyathelo egameni lakhe) nokuPhathwa nokuLawulwa Kwenkampani, ezinkampanini ezingama-40 ebezikleliswe phezulu ohlwini lwe-FTSE/JSE eNingizimu Afrika kusukela ngowezi-2008 kuya kowezi-2016. Izinhloso zalolu cwaningo kwabe kuwukubheka ukuthi zivamise kangakanani futhi zisabalele kangakanani izinkinga eziphathelene neNhloko ne-Ejenti kanye nokuPhathwa Nokulawulwa Kwenkampani ukuze kutholakale ukuthi zingakanani izindleko ezibangelwa yilezi zinkinga, nokuthola umthelela walokhu kwinhlalomnotho, kanye nokuhlola ukuthi zisebenza kahle kangakanani izinkambiso zokuphathwa nokulawulwa kwezinkampani. Lolu cwaningo lwakhelwe phezu kwethiyori yeNhloko ne-Ejenti. Kwasetshenziswa izindlela zocwaningo ezixubile, ikakhulukazi izindlela ezixubile zokuhlola kusetshenziswa izinyathelo ezenziwa kanyekanye noma ngesikhathi esisodwa kanye nezinyathelo ezilandelanayo. Okusemqoka okwatholakala ocwaningweni kubandakanya nokuthi izinkampani okwenziwa kuzona ucwaningo ezingama-23.91% zahlangabezana nezinkinga eziphathelene neNhloko ne-Ejenti kanye nokuPhathwa Nokulawulwa Kwenkampani – okuyinani elingaphezulu kakhulu kwalokho obekulindelekile ocwaningweni, ngoba phela kwakulindeleke ukuthi zibe yingcosana kakhulu izinkinga ezikhona eziphathelene nalokhu, kepha-ke ucwaningo lwaveza ukuthi lezi zinkinga zixhaphakile impela; imiholo yabaphathi abakhulu bezinkampani idlala indima enkulu ekubhebhethekiseni izinkinga eziphathelene neNhloko ne-Ejenti kanye nokuPhathwa Nokulawulwa Kwenkampani kunalokho obekulindelekile futhi esikhathini esiningi lokhu akuyona neze into evamise ukubhekisiswa uma kwenziwa izinqubo zokuphatha nokulawula; zibalelwa kwizigidigidi zamarandi izindleko ezingena kuzona izinhloko zezinkampani okucatshangwa ukuthi zibangelwa yizinkinga eziphathelene neNhloko ne-Ejenti kanye nokuPhathwa Nokulawulwa Kwenkampani; ukungalingani ngokwemiholo, ngaphandle kwesizathu esizwakalayo salokhu, okuyinto eholela kokunye futhi ukungalingani, okudala ukungathembani emphakathini; futhi kuncane kakhulu ukuqiniseka nokukholelwa ekutheni zisebenza kahle izinkambiso zokuphatha nokulawula ezikhona njengamanje. Igalelo lalolu cwaningo libandakanya isiphakamiso semodeli yemiholo yabaphathi abakhulu ebhekisisa nodaba lokuphathwa nokulawulwa kwenkampani ngenkathi kucutshungulwa udaba lwemiholo yabaphathi abakhulu; ukuhlanganiswa kwenkomba yokuphathwa nokulawulwa kwenkampani ebalwa ngokususela kwizincomo ze-King III kanye ne-King IV zokusetshenziswa kwesikali esifanayo sokukala ikhwalithi yokuphathwa nokulawulwa kwezinkampani; isikali semiholo se-Gini sasetshenziswa ukuhlonza amagebe akhona phakathi kwemiholo kanye nokuxwayisa ngezinkinga ezingahle zivele eziphathelene neNhloko ne-Ejenti kanye nokuPhathwa Nokulawulwa Kwenkampani kanye namaphutha nobuthakathaka obukhona ezinhlelweni zokuphatha nokulawula; futhi kwasetshenziswa izinqubo zezikali zobungozi bokulahlekelwa kwenkampani ukubala inani lezindleko okungenzeka kungenwe kuzona ngenxa yezinkinga eziphathelene neNhloko ne-Ejenti kanye nokuPhathwa Nokulawulwa Kwenkampani. Imibonongqangi evele kulokho okutholakale ocwaningweni yilena elandelayo; ithiyori echaza ubudlelwano phakathi kwenhloko ne-ejenti kumele yelulwe ukuze ifake phakathi nezindleko eziphathelene nenhlalomnotho futhi lokhu kungagcini nje kuphela kwinhloko; amamodeli omholo kumele abhekisise nendlela ephethwe ngayo inkampani ngabaphathi abakhulu kanye nemfundiso yokulingana kwabantu bonke ngokwenhlalo nangokomnotho; ukuguquguquka ‘kokuthobela umthetho noma ukuchaza’ (‘comply or explain’) kumele kube ngaphansi uma kuqhathaniswa nemiphumela yenhlalomnotho, ukuze kuqhanyukwe nendlela exubile ephoqelela ukusetshenziswa kwezinkambiso zokuphatha nokulawula ezithile; kanti futhi, okokugcina, ocwaningweni lokuphatha nokulawula kumele kusetshenziswe amathiyori aphathelene nesimo somqondo sabaphathi ngenkathi bethatha izinqumo nezinyathelo eziphathelene nokuphathwa nokusetshenziswa kwezimali ukuze kuqondakale kangcono konke okuphathelene nalokhu.Hierdie studie het van 2008 tot 2016 die gevolge van die wisselwerking tussen hoofagent- en korporatiewe regering in Suid-Afrikaanse FTSE/JSE Top 40- genoteerde maatskappye bestudeer. Die oogmerke was om die voorkoms van probleme met hoofagent- en korporatiewe regering te ondersoek; die moontlike koste en die sosio-ekonomiese gevolge daarvan te bepaal; en die doeltreffendheid van die regeerkodes te evalueer. Hierdie studie berus op die hoofagentteorie. Gemengde metodes is as metodologie gebruik, in die besonder gelyklopende en verkennende, opeenvolgende metodes. Die belangrikste bevindings is dat 23,91% van steekproefmaatskappye probleme met hoofagent- en korporatiewe regering ondervind. Dit is beduidend hoër as die persentasie wat verwag is, en ʼn aanduiding van hoe diepgaande hierdie probleme is. Die vergoeding van uitvoerende beamptes is ʼn groter oorsaak van die probleme met hoofagent- en korporatiewe regering as wat verwag is en waarvoor in regeermeganismes voorsiening gemaak word. Die potensiële koste, wat miljarde rande beloop, word gewyt aan die probleme met hoofagent- en korporatiewe regering wat prinsipale hulle op die hals haal. Onregverdigbare salarisverskille lei tot ongelykheid wat sosiale wantroue wek. Hierbenewens is daar bedenkinge oor die doeltreffendheid van die huidige regeerkodes. Die bydrae van hierdie studie behels ʼn vergoedingsmodel vir uitvoerende beamptes wat korporatiewe regering in ag neem. Hierdie studie formuleer ʼn regeerindeks wat op King III- en King IV-aanbevelings berus, en die meting van die gehalte van korporatiewe regering standaardiseer. Verskille in vergoeding, potensiële rooivlag-hoofagentprobleme en gebreke in regeerstelsels is met behulp van die salaris-gini bepaal. Waarde-op-risikoprosedures is gebruik om die potensiële koste van hoofagent- en korporatiewe regering te kwantifiseer. Die belangrikste teoretiese implikasie van die bevindings is dat die agentskapsteorie uitgebrei moet word sodat die sosio-ekonomiese koste vasgestel word, en daar nie alleen op die hoofsom gekonsentreer word nie. Afgesien hiervan moet vergoedingsmodelle rekening hou met ʼn uitvoerende beampte se korporatiewe regering en met maatskaplike en ekonomiese egalitarisme. Voorts moet die sosio-ekonomiese gevolge ondergeskik wees aan die buigsaamheid van “voldoen of verduidelik”. Dit impliseer ʼn hibridiese benadering wat die bepalings van sekere regeerkodes verpligtend maak. Ten slotte behoort finansieringsgedragteorieë in regeernavorsing aangewend te word om groter insig te verkry.Business ManagementD. Phil. (Management Studies (Finance)

Balancing budgets: tough choices we need

This report argues that a reform package could add about $37 billion a year to Australian government budgets and help to tackle Australia’s growing budget crisis.OverviewAustralian governments must make tough choices to balance their budgets. They face a decade of deficits, the result of big ticket spending initiatives, rising health costs, pressure on welfare budgets and an inevitable fall in the terms of trade. Collectively these could lead to deficits of 4 per cent of GDP, or$60 billion in today’s terms, within a decade.Tough choices cannot be put off indefinitely. Deficits impose heavy costs on the next generation in terms of debt and high interest payments. Government budgets cannot simply grow out of trouble, and the next decade may well be economically more difficult than the last.History shows that governments that successfully repair their budgets make the public case for reform, and start early on the hard work of cutting expenditure and raising taxes. They design a package of measures that share the burden of reform fairly across the community.This report surveys all realistic proposals that could contribute $2 billion a year or more to government budgets. It puts a priority on reforms that are big enough to make a difference but do not have unacceptable economic and social effects.One reform package could add$37 billion a year to the federal budget. It would broaden the GST to include fresh food and private spending on health and education; raise the age of access to superannuation and the Age Pension; remove the exemption for owner-occupied housing from the assets test for the Age Pension; and limit tax concessions on superannuation contributions. The burden of these changes would be spread across rich and poor, workers and retirees. While all these reforms are unlikely to occur at once, it will be hard to close the looming budget gap without tackling any of them.Structural reform of benefits and tax exemptions for older Australians offer many of the best opportunities for budget reform. They are the least-well targeted parts of our tax and welfare system, with some benefits going to people that don’t need them.Substantial budget repair almost always involves tax reform. Increasing fuel excise in line with inflation would raise significant revenue, although it hits those with low incomes particularly hard. Higher rates of existing taxes could raise large revenues. Raising the GST and municipal rates would slow economic growth less than other tax increases.Plausible reductions in spending on transport infrastructure, industry support, school class sizes, higher education subsidies, pharmaceuticals, health services, and defence could collectively improve budget positions by $23 billion per year. But the execution risks are high – there would be unacceptable economic and social effects unless the cuts were executed unusually well. By contrast, the oft-cited cuts to the public service and ‘middle class welfare’ can do relatively little to improve budget balances.Sustainable budgets depend on governments making tough choices. None will be politically easy, but making some of them is vital to Australia’s prosperity

‘Technology as a trusted companion for accountants and business professionals in the business unusual environment’

Abstract: A conceptual model of corporate social responsibility (CSR) and service quality for Islamic bank service users is developed in this paper. The model is expected to bring about a better understanding of customer perceptions relating to issues of social responsibility and its impact on service quality as it pertains to Islamic banking in South Africa. The conceptual model is developed by synthesising relevant literature and theories pertaining to this study. This conceptual model is proposed to be tested in due course of time by using customer perceptions derived from a survey instrument to assess the relationship between aspects of social responsibility and service quality at the Islamic bank. The proposed model has implications towards enhancing the CSR and service quality offered by the Islamic bank according to their customer expectations

The Realities and Futures of Work

What do we know about the current realities of work and its likely futures? What choices must we make and how will they affect those futures? Many books about the future of work start by talking about the latest technology, and focus on how technology is going to change the way we work. And there is no doubt that technology will have huge impacts. However, to really understand the direction in which work is going, and the impact that technology and other forces will have, we need to first understand where we are. This book covers topics ranging from the ‘mega-drivers of change’ at work, power, globalisation and financialisation, to management, workers, digitalisation, the gig economy, gender, climate change, regulation and deregulation. In doing this, it refers to some of the great works of science fiction. It demolishes several myths, such as that the employment relationship is doomed, that we are all heading to becoming ‘freelancers’ or ‘gig workers’ one day, that most jobs will be destroyed by technological change, that the growth in jobs will mainly be in STEM fields, that we will no longer value collectivism as we will all be ‘individuals’, or that the death of unionism is inevitable. The Realities and Futures of Work also rejects the idea of technological determinism—that whatever will be, will be, thanks to technological change—and so it refuses to accept that we simply need to prepare to adapt ourselves to the future by judicious training since there is nothing else we can do about it. Instead, this book provides a realistic basis for thinking about both the present and the future. It emphasises the choices we make, and the implications of those choices for the future of work

A framework for corporate governance and organisational performance in the Fourth Industrial Revolution.

Doctoral Degree. University of KwaZulu-Natal, Durban.ENGLISH ABSTRACT Corporate governance is becoming more widely recognized as a critical factor in determining an organization's overall performance. The King Code I-IV was created to provide a corporate governance framework for South African corporations that is easy to understand and follow. The fourth industrial revolution forces change and flexibility, necessitating innovation in order to compete in a fast-changing environment. The purpose of the research was to look at the basic endemic corporate governance practices that make Ithala Development Finance Corporation (IDFC) efficient and come up with a conceptual and legislative framework for them. Microsoft Forms were used to collect the information. The study used a pragmatic mixed methods approach. The descriptive statistics were calculated using the Statistical Package for the Social Sciences (SPSS) version 27. All study components were subjected to exploratory factor analysis (EFA), and research hypotheses were tested using Structural Equation Modelling (SEM) in SmartPLS version 3. The findings of the study confirmed a relationship between board independence and organisational performance. The findings on board diversity were inconclusive. The relationship between board committees and organisational performance was not supported. The relationship between board oversight responsibility and organisational performance was positively confirmed. Finally, the relationship between a CEO's people-centred leadership skills and organisational performance was positively confirmed and supported. The study is limited to IDFC and cannot be generalised. The findings of this study will add to growing existing knowledge that will aid in the understanding of corporate governance's impact on organisational performance. This research will also assist business leaders in implementing King IV and corporate governance as a driver of organisational performance and the fourth industrial revolution. This thesis's theoretical framework, conceptual framework, and results are likely to entice researchers to do further study into identifying the parts of corporate governance that are critical for strong organisational performance. It should also encourage practitioners, executives of state-owned enterprises, and researchers of strategy, business leadership, and corporate governance to participate more deeply in discussions about the fourth industrial revolution and organisational performance. The findings should find significance to public officials and government leaders, given their considerable interest in long-term company success. isiZULU ABSTRACT Ukuphathwa kwebhizinisi sekuqashelwa kabanzi njengento ebalulekile ekunqumeni ukusebenza kwenhlangano kukonke. I-King Code I-IV yadalelwa ukuhlinzeka ngohlaka lokuphatha ngebhizinisi lwezinkampani zaseNingizimu Afrika okulula ukuluqonda nokululandela. Uguquko lwesine lwezimboni luphoqa uguquko kanye nokuvumelana nezimo, okudinga ukusungulwa okusha ukuze kuqhudelane endaweni eshintsha ngokushesha. Inhloso yocwaningo bekuwukubheka izinqubo eziyisisekelo zokuphatha izinkampani ezenza Ithala Development Finance Corporation (IDFC) isebenze kahle futhi iqhamuke nohlaka lomqondo kanye nemithetho yazo. Amafomu e-Microsoft asetshenziselwa ukuqoqa ulwazi. Ucwaningo lusebenzise izindlela ezixubile zepragmatic. Izibalo ezichazayo zibalwe kusetshenziswa iPhakheji Yezibalo Yesayensi Yezenhlalakahle (SPSS) inguqulo 27. Zonke izingxenye zocwaningo zacutshungulwa iexploratory factor analysis (EFA), futhi imibono yocwaningo yahlolwa kusetshenziswa i-Structural Equation Modeling (SEM) kunguqulo yesi-3 ye-SmartPLS. Okutholwe ocwaningweni kuqinisekise ubudlelwano phakathi kokuzimela kwebhodi nokusebenza kwenhlangano. Okutholwe ekuhlukeni kwebhodi bekungaphelele. Ubudlelwano phakathi kwamakomiti ebhodi nokusebenza kwenhlangano abusekelwanga. Ubudlelwano phakathi kwesibopho sokwengamela ibhodi nokusebenza kwenhlangano buqinisekiswe kahle. Ekugcineni, ubudlelwano phakathi kwamakhono obuholi obugxile kubantu abango-CEO kanye nokusebenza kwenhlangano baqinisekiswa futhi basekelwa. Ucwaningo lukhawulelwe ku-IDFC futhi alukwazi ukwenziwa jikelele. Okutholwe kulolu cwaningo kuzokwengeza olwazini olukhona olukhulayo oluzosiza ekuqondeni umthelela wokuphatha ngokubambisana ekusebenzeni kwenhlangano. Lolu cwaningo luzosiza futhi abaholi bamabhizinisi ekusebenziseni i-King IV kanye nokuphathwa kwebhizinisi njengomshayeli wokusebenza kwenhlangano kanye nenguquko yesine yezimboni. Uhlaka lwale thesis, uhlaka lomqondo, kanye nemiphumela cishe izoheha abacwaningi ukuthi benze ucwaningo olwengeziwe ukuze bahlonze izingxenye zokubusa kwebhizinisi ezibalulekile ekusebenzeni okuqinile kwenhlangano. Kufanele futhi ikhuthaze abasebenzi, abaphathi bezinkampani zikahulumeni, nabacwaningi bamasu, ubuholi bamabhizinisi, kanye nokuphathwa kwebhizinisi ukuthi babambe iqhaza bajule ezingxoxweni mayelana nenguquko yesine yezimboni nokusebenza kwenhlangano. Okutholakele kufanele kube okubaluleke kakhulu ezikhulwini zikahulumeni kanye nabaholi bakahulumeni, uma kubhekwa intshisekelo yabo enkulu empumelelweni yesikhathi eside yenkampani

The economic crisis and community development finance: an industry assessment

For thirty years, the community development finance industry—banks, credit unions, loan funds, community development corporations, venture funds, microfinance institutions—has quietly provided responsible, well-designed and well priced credit to lower-income people and communities. These entities have provided this credit with the support of the federal government, through the Community Development Financial Institutions Fund, the Low Income Housing and New Markets Tax Credits, the Small Business Association, the U.S. Department of Agriculture, and various housing and facilities development programs. The industry has also been supported in its efforts by mainstream institutions such as banks and insurance companies, most frequently motivated by the Community Reinvestment Act (CRA) or by concern that CRA-like obligations would be imposed. Philanthropic foundations and supporters and state and local governments have also played their parts. The result: a community development finance industry that has survived and even prospered during recessions and political downdrafts. But the field, and the communities, businesses, and individuals it serves, are hurting now, and fearing bigger hurt. This paper examines this situation and focuses attention on what needs to be done.

Extractive Industries

"New initiatives recognize that resource wealth can provide a means, when properly used, for poorer nations to decisively break with poverty by diversifying economies and funding development spending. Extractive Industries: The Management of Resources as a Driver of Sustainable Development explores the challenges and opportunities facing developing countries in using oil, gas, and mining to achieve inclusive change. While resource wealth can yield prosperity it can also, when mismanaged, cause acute social inequality, deep poverty, environmental damage, and political instability. There is a new determination to improve the benefits of extractive industries to their host countries, and to strengthen the sector's governance. Extractive Industries provides a comprehensive contribution to what must be done in this sector to deliver development, protect often fragile environments from damage, enhance the rights of affected communities, and support climate change action. It brings together international experts to offer ideas and recommendations in the main policy areas. With a breadth of collective insight and experience, it argues that more attention must be given to the development role of extractive industries, and looks to the future to explain how action on climate change will profoundly shape the sector's prospects.

Labour Exploitation and Work-Based Harm

Labour exploitation is a highly topical though complex issue that has international resonance for those concerned with social justice and social welfare, but there is a lack of research available about it. This book, part of the Studies in Social Harm series, is the first to look at labour exploitation from a social harm perspective, arguing that, as a global social problem, it should be located within the broader study of work-based harm. Written by an expert in policy orientated research, he critiques existing approaches to the study of workplace exploitation, abuse and forced labour. Mapping out a new sub-discipline, this innovative book aims to shift power from employers to workers to reduce levels of labour exploitation and work-based harm. It is relevant to academics from many fields as well as legislators, policy makers, politicians, employers, union officials, activists and consumers

Labour Exploitation and Work-Based Harm

Labour exploitation is a highly topical though complex issue that has international resonance for those concerned with social justice and social welfare, but there is a lack of research available about it. This book, part of the Studies in Social Harm series, is the first to look at labour exploitation from a social harm perspective, arguing that, as a global social problem, it should be located within the broader study of work-based harm. Written by an expert in policy orientated research, he critiques existing approaches to the study of workplace exploitation, abuse and forced labour. Mapping out a new sub-discipline, this innovative book aims to shift power from employers to workers to reduce levels of labour exploitation and work-based harm. It is relevant to academics from many fields as well as legislators, policy makers, politicians, employers, union officials, activists and consumers