Dissertations / Theses on the topic 'Finance management. Business finance. Corporation finance'

The financial crisis that started in 2008 led to issues of corporate financial distress and bankruptcy. The global financial crisis has resulted in many venerable institutions being rescued by the government. There is an ongoing research debate in law and economic theories about the efficiency of the US bankruptcy code (Senbet and Wang, 2012; Jory and Madura, 2010; Zhang, 2010; Faelten and Vitkova, 2014). Due to the global financial crisis, there is a fundamental issue questioning whether the bankruptcy law (e.g., Chapters 11 and 7 of the US Bankruptcy Code) is efficient in rehabilitating economically efficient but financially distressed firms and liquidating economically inefficient firms (Senbet and Wang, 2012). Mergers and acquisition (hereafter M&A) involving financially distressed targets and bankrupt targets have become a common practise in the US. Theoretically, restructuring is meant to be a way of reorganizing operations and generating extra resources. However, due to the complexity of businesses and recent global financial crises, there is inconsistency in the association of rewards for Chief Executive Officers (CEOs) and management with the firm's performance. This thesis explores the issues about corporate restructuring, performance and governance of firms including banks in the US emanated from the economic crisis. It comprises three empirical pieces of research. The first empirical research is on the wealth creation of bidders and of M&As of financial distressed and bankrupt targets. Our second research is about the earnings management behaviour of managers. Of those that were involved in the restructuring and reorganization of an organization. It is especially related to carve-out, sell-off, spin-off and other types of divestitures. Our third essay is on bank efficiency; taking into consideration the importance and crucial and urgency in the research related areas, such as the pay structure of the top management, and the existence of the internal monitoring. Institutional ownership plays an important role in corporate performance of firms particularly to banks in the US. First, we examine the wealth effects of M&A activities involving financially constrained targets (hereafter FCTs). By interrogating the wealth creation of bidders of these target firms, this study extends the analysis on the relationship between the discount on deal value, and the financial health of bidder firms. Based on sample data between 1985 and 2012, the study finds that bidders of FCTs earn abnormally positive cumulative abnormal returns (CARs) the day of the M&A announcement. This contrasts with the findings of negative to zero CARs accruing to bidders of financially healthy targets, as documented in the literature. The bidder firms benefit from a low M&A premium on these deals. However, in the long run, both their stock and operating performance lag those of bidders of healthy targets. Second, we examine the earnings management (hereafter EM) behaviour of firms engaged in corporate reorganization and restructuring. More specifically, our sample includes carve-outs, spin-offs, asset sell-offs, and divestitures. We follow Anagnostopoulou and Tsekrekos (2015) and Cohen and Zarowin (2010) to calculate the EM variables. This is so especially the accrual-based and real EM variables. To measure firm performance, we use industry-adjusted return on assets (ROA), cumulative abnormal returns (CARs), and Buy-and-Hold Abnormal Return (BHARs). We use the standard deviation of monthly stock returns (SDAR), as the proxy to measure the stock volatility and information asymmetry. We document a direct relationship between firms that manage earnings above the industry-year median EM index, and changes in the ROA, CARs, and BHARs. Conversely, firms that manage their earnings EM are associated with lower standard deviations in the firms' stock returns for carve-outs. Finally, we examine the relationship between the CEO's pay (CPS) and each of the bank's efficiency and risk. We use several measures of CEO pay including the ratio of CEO pay-to-the total pay of the top five managers. The ratio of CEO pay to the total pay of executives who also serve on the firm's board. We use the Stochastic Frontier Analysis (SFA) to measure bank efficiency. To measure firm risk, we compute the Z-Score and standard deviation of daily and annual returns. We document an inverse relationship between CEO pay ratio and bank efficiency. Conversely, high pay disparity is associated with lower insolvency risk, lower Z-scores, and lower standard deviations in the banks' stock returns.

The perceived capability of corporate organizations to influence politics, although fueling an ongoing public debate, features in literature as a source of probable benefits. According to the majority of the pertinent studies, these benefits, more often than not, materialize with important value-adding implications. In the U.S. context, whereby political money contributions constitute the prevalent way of establishing connections, this can result in a hefty return on a firm's political investment. Our research posits that if political connections formed via monetary donations elevate the donor to a higher status, this should reflect in circumstances whereby a firm needs to assert its quality to other economic agents. This is the case for firms that are plagued by the market newness liability. Whether as a form of insurance from tail risk or entitlement to economic rents, proximity to politics offers legitimacy and a compelling way of introducing a new venture to the marketplace. To prove this conjecture, we mainly draw from IPOs for representing a setting of acute uncertainty. Our findings confirm that both lobbying and PAC (Political Action Committee) expenditure pays off on listing day as donors incur less underpricing; an effect which can be amplified with contribution size and strategic targeting of recipients. Donor IPOs also experience negative offer price revisions and lower aftermarket volatility. Collectively, these results offer new empirical grounding to uncertainty and signaling theories. Subsequently, we frame IPO pricing as an efficiency problem for prospective issuers and develop an approach of general application in finance, where relationships of influence are suspected. Rather than imposing a regression-based framework, we allow relationships to manifest themselves in a data-driven manner. Our analysis reveals nonlinearities between IPO pricing efficiency and the two contribution avenues (justifying the fully nonparametric treatment). We are able to uncover relationships separately according to business sector, which we interpret in terms of varied competitive environments. Broadening up our scope prior to and after the IPO event, we document that connected firms are associated with a longer time to venture or other equity capital financing, attesting to a greater financial autonomy. Additionally, they attain larger market shares and have a superior likelihood of survival in the public domain.

This thesis examines several important aspects of the impact of religiosity, national culture, corporate governance, BIG4 auditors and legal environment on earnings management practices in the U.S. and 63 other countries. First, the study investigates the extent to which religious socials norms of the firms' environment interact with corporate governance and BIG4 audit to affect managers' motivation to engage in expense and revenue misclassification in order to influence reported core earnings. The results show that religiosity decreases misclassification and complements corporate governance and the Sarbanes-Oxley Act (2002) to mitigate classification shifting in high, rural and geographically centralised segment areas. In a religious social norm environment, the study finds that managers have a disincentive to shift revenue items from, and core expenses into, special items to inflate reported core earnings to avoid market penalties and beat analysts' forecasts, even more so in the presence of board independence. In addition, the study shows that the interactive term between religiosity and audit from the big four auditors also lowers the presence of misclassification. Overall, the results show that religiosity lessens misclassification and complements corporate governance and audit against the misclassification of revenue items or core expenses. Second, the study examines the extent to which religiosity, firms' legal environment, and the interaction between these two variables affect accrual-based and real-activities earnings management. The results suggest that religiosity, legal environment and the interaction between them mitigate accrual-based earnings management. In contrast, the study observes a positive association between religiosity and real-activities earnings management, suggesting that religious social norms facilitate real-activities earnings management. However, the positive effect of religiosity on real activities is subdued when the study interacts the legal environment with religiosity. The results also indicate that firms' corporate governance mechanism mitigates both accrual-based and real activities earnings management. Finally, in Chapter four, the study provides new international evidence by examining the relationship between the misclassification of core expenses into special items and country-wide religiosity, the national dimensions of culture, and the legal environment in developed, emerging and developing countries. The study observes that the interaction between religiosity and legal environment, or national cultural dimensions and legal environment, mitigates expense misclassification in developed, emerging and developing countries. Therefore, the positive effect of power distance, masculinity and uncertainty avoidance on earnings management can no longer be demonstrated when national dimensions of culture interact with the legal environment. In Chapter five, the study concludes, summarises and discusses some of its major findings and contributions. The limitations of the study, policy implications and suggestions for future research are also provided.

In empirical financial accounting research, there continues to be a debate as to what the best predictors of future earnings and future cash flows might be. Past accruals, earnings and cash flows are the most common predictors, but there is no consensus over their relative contributions, and little attention to the underlying accounting identities that link the components of these three prominent variables. The aim of this thesis is to investigate this controversy further, and to apply an innovative method which yields consistent estimations of future earnings and cash flows, with higher precision and greater efficiency than is the case in published results to date. The estimation imposes constraints based on financial statement articulation, using a system of structural regressions and a framework of simultaneous linear equations, which allows for the most basic property of accounting - double entry book-keeping - to be incorporated as a set of constraints within the model. In predicting future cash flows, the results imply that the constrained model which observes the double entry condition is superior to the models that are not constrained in this way, producing (a) rational signs consistent with expectations, not only in the entire sample but also in each industry, (b) evidence that double entry holds, based on the Wald test that the estimated marginal responses sum to zero, and (c) confirmation of model improvement by way of a higher likelihood and greater precision attached to predictor variables. Furthermore, by then using an appropriately specified model that observes the double entry constraint in order to predict earnings, the thesis reports statistically significant results, across all industries, that cash flows are superior to accruals in explaining future earnings, indicating also that accruals with a lower level of reliability tend to be more relevant in this respect.

The aim of this study is to examine why firms may manipulate not just their earnings but also their cash flows, and to investigate the effects of this behaviour in debt markets with respect to the cost of debt. This research addresses current concerns about accounting rules (both GAAP and IFRS) which allow companies discretion in the presentation of their operating cash flow in financial statements. Using a sample of 8,684 UK and 23,935 USA firm-years from 1998 to 2010, the reported operating cash flow is decomposed into two components, unmanaged and managed, in order to examine the association between the estimated discretionary part of operating cash flow and the cost of debt. The results show that the cost of debt has a significantly positive association with the managed component of operating cash flows. By using path analysis, it is further shown that the effect of cash flow management in increasing the cost of debt is largely through its impact on accounting quality. Also it is found that the market positively prices abnormal operating cash flow information when firms experience financial problems, especially when companies are faced with low cash flows.

Thesis (MDF)--Stellenbosch University, 2011.
This study considers the impact that the particular funding structure used in the financing of black economic empowerment (BEE) transactions has on the expected outcome. Various structures are evaluated, each with their particular advantages and disadvantages. The report details the history of South Africa, the Industrial Development Corporation (IDC), as well as the black economic empowerment phenomenon. An in-depth commentary on the financing structures used for BEE transactions within the IDC is presented together with a new, remodeled structure to be used in the analysis as part of a comparative study to determine whether the existing preferential Vanilla Special Purpose Vehicle (SPV) structure garners the most appropriate result for the BEE entrepreneur. The statistical study tests whether the Vanilla SPV structure, where the financier is reliant on dividends for the repayment of their preference shares, is a better structure than the reworked SPV structure, where the financier is reliant on free cash flow for repayment. The results infer that access to free cash flow is preferred by both the financier, as well as the BEE party, as vesting is higher and the bullet payment required to attain that vesting is significantly lower.

Thesis (MComm (Business Management))--University of Stellenbosch, 2010.
ENGLISH ABSTRACT: The determinants of capital structure form an important part of the finance profession. Contemporary capital structure theory began in 1958 when Modigliani and Miller indicated that in a perfect capital market, the value of a firm is not influenced by its capital structure. However, when considering, inter alia, the effect of taxes, bankruptcy costs and asymmetric information, the value of a firm could be affected by its leverage. Capital structure theory offers two contrasting capital structure models, namely the trade-off and pecking order models. According to the trade-off model, firms trade-off the costs and benefits of debt financing in order to reach an optimal capital structure. According to this model, a positive relationship exists between leverage and profitability. In contrast, the pecking order model indicates that firms use a financing hierarchy where internal funds are preferred above debt and equity usage. This model indicates a negative relationship between leverage and profitability. However, in practice, firms often deviate from these models to incorporate the benefits of the other model or to adapt to changing circumstances. Firms' financing decisions may be influenced by both firm-specific and economical factors within the country where they are operating. Therefore, a firm's managers should consider the growth rate, interest rate, repo rate, inflation rate, exchange rates and the tax rate when conducting finance decisions, since these factors could influence the cost and availability of capital. In addition, these economical factors often have a significant influence on each other. Prior capital structure research mainly focused on developed countries. However, South Africa provides the ideal environment to consider the effect of economic changes on capital structure within a developing country, due to South Africa's profound economic changes during 1994 and the years to follow. The primary objective of this study was thus to determine whether the capital structures of South African listed industrial firms are influenced by changes in the South African economical environment. The effect of economic changes on capital structure was examined by using a TSCSREG (time-series cross-section regression) procedure. The regression model is based on a model developed by Fan, Titman and Twite (2008). One-period lags were built into the model to make provision for the effect of economic changes that often only occur after some time. The study was conducted on a sample of firms listed on the industrial sector of the Johannesburg Securities Exchange (JSE Ltd) over the period 1989 to 2008. The data, required to calculate the measures, were obtained from the South African Reserve Bank, the South African Revenue Service and the McGregor BFA database. This database contains standardised financial statements for both listed and delisted South African firms. In an attempt to reduce the possible skewing of results due to survivorship bias, both listed and delisted firms were included in the sample. In order to reflect its true nature, data should be available for consecutive years. Therefore, only firms with data available for more than five years were included in the final sample. The resulting sample consisted of 320 firms and 4 172 observations. The sample was also divided into years before and years after 1994, in order to determine the effect of the economic changes during 1994 and the years to follow on the firms' capital structures. The results of this study indicated that some of the economic factors influenced the D/E ratio as well as each other. However, the effect of economic changes often only occurred after a lagged period. A strong relationship was indicated between the tax rate and the repo rate, which influenced the significance of the regression results. Support was found for both the trade-off and the pecking order models. The combined profitability variable ROA-ROE also had a significant effect on the other variables. Based on these results, the claim that economic changes have an impact on capital structure is supported. The effect is often only indicated after a certain period. It also seems that the combination of the two capital structure models have a significant effect on leverage. Firms therefore appear to consider a combination of these models when conducting finance decisions.
AFRIKAANSE OPSOMMING: Die determinante van kapitaalstruktuur speel belangrike rol in die finansiële professie. Hedendaagse kapitaalstruktuurteorie het in 1958 tot stand gekom toe Modigliani en Miller aangedui het dat die waarde van 'n firma in 'n perfekte kapitaalmark nie deur kapitaalstruktuur beïnvloed word nie. Maar, wanneer die uitwerking van onder andere belastings, die koste van bankrotskap en asimmetriese inligting in ag geneem word, kan die waarde van 'n firma deur sy finansiële hefboomwerking beïnvloed word. Kapitaalstruktuurteorie bied twee kontrasterende kapitaalstruktuurmodelle, naamlik die ruilmodel (trade-off model) en rangorde-model (pecking order model). Volgens die ruilmodel vergelyk firmas die kostes en voordele van finansiering met geleende kapitaal totdat 'n optimale kapitaalstruktuur bereik word. Hierdie model dui op die bestaan van 'n positiewe verband tussen hefboomwerking en winsgewendheid. In teenstelling hiermee dui die rangorde-model aan dat firmas 'n finansieringshiërargie gebruik waar interne fondse verkies word bo skuld en ekwiteit. Hierdie model dui 'n negatiewe verband aan tussen hefboomwerking en winsgewendheid. In die praktyk wyk firmas egter dikwels af van hierdie modelle om die voordele van die ander model te inkorporeer of om by veranderende omstandighede aan te pas. Firmas se finansieringsbesluite kan beïnvloed word deur beide firma-spesifieke en ekonomiese faktore in die land waar hulle sake doen. Daarom moet 'n firma se bestuurders die groeikoers, rentekoers, inflasiekoers, wisselkoerse en die belastingkoers oorweeg wanneer hulle finansieringsbesluite neem, aangesien hierdie faktore moontlik die koste en beskikbaarheid van kapitaal kan beïnvloed. Hierdie ekonomiese faktore het dikwels ook 'n belangrike invloed op mekaar. Vroeëre navorsing insake die kapitaalstruktuur het dikwels op ontwikkelde lande gefokus. Suid-Afrika bied egter die ideale omgewing om die uitwerking van ekonomiese veranderinge op kapitaalstruktuur in 'n ontwikkelende land te ondersoek as gevolg van Suid-Afrika se betekenisvolle ekonomiese veranderinge gedurende 1994 en die daaropvolgende jare. Die primêre doelwit van hierdie studie was dus om te bepaal of die kapitaalstruktuur van genoteerde Suid-Afrikaanse nywerheidsondernemings deur veranderinge in die Suid-Afrikaanse ekonomiese omgewing beïnvloed word. Die uitwerking van ekonomiese veranderinge op kapitaalstruktuur is ondersoek deur gebruik te maak van 'n TSCSREG (tydreeks dwarssnit-regressie)-prosedure. Hierdie regressiemodel is gebaseer op 'n model wat deur Fan, Titman en Twite (2008) ontwikkel is. Enkeltydperk-vertragings is in die model ingebou om voorsiening te maak vir die uitwerking van ekonomiese veranderinge wat dikwels eers ná 'n tydperk sigbaar word. Die studie is uitgevoer op 'n steekproef firmas wat gedurende die tydperk 1989 tot 2008 op die nywerheidsektor van die Johannesburgse Sekuriteitebeurs (JSE Ltd) genoteer is. Die nodige data om die metings te bereken is verkry van die Suid-Afrikaanse Reserwebank (SARB), die Suid-Afrikaanse Inkomstediens (SAID) en die McGregor BFA-databasis. Hierdie databasis bevat gestandaardiseerde finansiële state vir beide genoteerde en gedenoteerde Suid-Afrikaanse firmas. In 'n poging om die moontlike skeeftrekking van resultate as gevolg van die oorlewingsneiging te verhoed, is beide genoteerde en gedenoteerde firmas by die steekproef ingesluit. Data moet vir opeenvolgende jare beskikbaar wees om die ware aard daarvan aan te dui. Daarom is slegs firmas met data beskikbaar vir meer as vyf jaar in die finale steekproef ingesluit. Die steekproef het gevolglik 320 firmas en 4 172 waarnemings behels. Die steekproef is ook in jare voor en jare ná 1994 verdeel, om die uitwerking van ekonomiese veranderinge gedurende 1994 en die daaropvolgende jare op firmas se kapitaalstruktuur te bepaal. Die bevindinge van die studie het daarop gedui dat sommige van die ekonomiese faktore die skuld/ekwiteit (D/E)-verhouding, maar ook elkeen van hulle beïnvloed het. Die uitwerking van ekonomiese veranderinge het egter dikwels eers ná 'n vertraagde tydperk sigbaar geword. 'n Sterk verhouding is aangedui tussen die belastingkoers en die repokoers, wat die betekenisvolheid van die regressieresultate beïnvloed het. Ondersteuning is gevind vir beide die ruilmodel en die rangorde-model. Die gekombineerde winsgewendheidsveranderlike ROA-ROE het ook 'n betekenisvolle uitwerking op die ander veranderlikes gehad. Die bewering dat ekonomiese veranderinge 'n impak op die kapitaalstruktuur het, word ondersteun op grond van die bevindinge van hierdie studie. Die uitwerking daarvan word egter dikwels eers ná 'n tydperk sigbaar. Die gekombineerde kapitaalstruktuurmodelle het moontlik 'n betekenisvolle uitwerking op hefboomwerking. Dit wil dus voorkom of firmas 'n kombinasie van hierdie modelle oorweeg wanneer hulle finansieringsbesluite neem.

Thesis (MDF (Business Management))--University of Stellenbosch, 2007.
AFRIKAANSE OPSOMMING: Tegniese bystand bly steeds ’n aktuele kwessie in die meeste ontwikkelende lande. Tegniese samewerking is vir baie dekades gebruik as ’n werktuig vir die opbou van toenemende kapasiteit en, van groter belang, as ’n manier om projekte te implementeer. Werkskrag is nodig sodat ontwikkeling kan plaasvind. Dit is ’n uitdaging om te bepaal hoe tegniese bystand voorsien moet word, en of sodanige bystand wél aan die ontvanger se behoeftes voldoen. Sommige is van mening dat Westerse lande geneig was om aan ontwikkelende lande voor te skryf watter soort tegniese bystand hulle sou benodig. Dit het daartoe gelei dat die meeste ontvangers nie verantwoordelikheid vir produksie aanvaar het nie. Navorsing verwys na die behoefte vir tegniese bystand asook die sukses wat tot nou toe behaal is op dié terrein, alhoewel dit gering was. Die meeste ontwikkelende finansiële instansies, insluitende die Wêreldbank, lewer bewys van tegniese bystandsprogramme. Hierdie programme dien as ondersteuning vir instansies in die uitbetaling van verdere fondse vir ontwikkeling. Die verslag dui aan dat, alhoewel tegniese bystand en ontwikkelingsfinansiering wél werk, vooruitgang steeds nodig is.
ENGLISH ABSTRACT: Technical assistance continues to be a topical issue in most developing countries. For many decades, technical cooperation has been used as a vehicle to build capacity building and, more importantly, as a way to implement projects. Capacity is required for development to take place. The challenge is how the technical assistance is provided, and whether such assistance is what the recipient needs. Western countries have tended to prescribe to the developing countries in terms of the kind of technical assistance they need, which has resulted in many recipients not taking responsibility for the output. The research alludes to the need for technical assistance and the successes that have been achieved until now in the field, even though they have been marginal. Most development finance institutions, including the World Bank, are shown to have technical assistance programmes. Such programmes assist the institutions in disbursing more development funds. The Report indicates that, although technical assistance and development finance do work, improvement is still required.

Thesis (MDF)--Stellenbosch University, 2011.
In the past it was believed that the payment of dividends would decrease the funds available to finance growth, and would therefore lead to lower future earnings growth. This belief was challenged in recent years with research that tested the relationship between dividend payout and future earnings growth, both on the individual company and aggregate market level in different countries. The results contradicted popular belief, and showed that companies with high payout ratios tend to realise stronger future earnings growth. This study tested the same relationship in South Africa and concluded that even in a developing country, dividend payout will still lead to higher future earnings growth.

Thesis (MBA)--Stellenbosch University, 2002.
Some digitised pages may appear illegible due to the condition of the original hard copy
ENGLISH ABSTRACT: With the trends of business moving away from large, corporate companies to small, flexible and innovative alternatives, the need to value new companies are becoming important. A new company generally does not have substantial historical data available and it is therefore difficult to determine potential revenue streams and hence accurate valuations. The focus of this study is to find an appropriate method to attempt the valuation of a new company and this is explained by means of a case study. Three basic approaches exist to value companies. The Discounted Cash Flow (DCF) method analyses risk and return to estimate a discount rate and presents the value of the company as a Net Present Value (NPV). Relative Valuation methods compare the fundamentals of a company to that of other companies. Contingent Claim Valuation methods base the value of a company on the fact that decisions may be deferred into the future until more information is evident. The basis of this valuation technique is that of Option Pricing Theory in which the Black-Scholes technique and binomial models are used .: This method is normally used on assets that have optionlike features e.g. equity in a company, natural resource rights, product patents or any decision that may be deferred into the future. Decisions (options) deferred may be identified as growth-, staged-, flexibility-, exit-, learning- and expanding options. This is also known as the Real Option Pricing Theory. According to this model the investment proposal may be mapped as a series of call options (Luehrman, 1998a). The amount of money expended in the project corresponds to the option's exercise price (X), the present value of the asset built or acquired corresponds to the stock price (S), the length of time the company can defer the investment decision corresponds to the option's time to expiration (t) and the uncertainty about the future value of the project's cashflow corresponds to the standard deviation of return on the stock (c). Seven steps are used to obtain the value of the call option and the value is reflected by two option-value metries namely the value-to-cost (NPVq) and cumulative volatility (cr--Jt).The two metries are plotteá on a graph (defined as Options Space) in order to visualize and interpret the results. Mushroom Biomedical Systems developed three highly novel and patented products. The company was valued using the conventional OeF method and valued as a staged investment using the Real Option Pricing Theory according to Luehrman's model (1998a). The values of two products are similar using the OeF and Real Options methods. Most of the investment capital was required during the first phases of these products resulting in the investment of the second phases not holding high risks or value. The value of the third product is significantly higher using the Real Options method compared to the OeF. This is ascribed to the forced delay of phase one. The value of this future decision is worth more than the current decision due to expected new information that might arise. By "creating an option" value is added by forcing management to actively make two decisions about the continuation of the project at a future date. Applying Real Option Pricing Theory suggests inherent value in uncertainty when there is freedom to choose different courses of action in the face of different market conditions. With the OeF analysis the impact of risk is seen as depressing the value of the investment. By contrast, real options show that risk can be influenced through managerial flexibility, which becomes a central instrument to create value.
AFRIKAANSE OPSOMMING: Die beweging van die besigheidswêreld vanaf groot korporatiewe maatskappye na kleiner, buigsame en innoverende alternatiewe het 'n behoefte geskep om die waarde van sulke nuwe maatskappye te kan bepaal. 'n Nuwe maatskappy het tipies nie historiese data beskikbaar nie wat die vooruitskatting van potensiële inkomste strome en dus akkurate waardasies moeilik maak. Die fokus van hierdie studie is die bepaling van 'n toepaslike metode om die waarde van 'n nuwe maatskappy te bepaal en dit word deur middel van 'n gevalle studie verduidelik. Drie basiese metodes bestaan om maatskappye te waardeer. Die Verdiskonteerde Kontantvloei Stroom (VKS) metode gebruik risiko en opbrengs om 'n verdiskonteringskoers te bepaal en reflekteer die waarde van die maatskappy as die Netto Teenswoordige Waarde (NTW). Relatiewe Waardasie metodes vergelyk die fundamentele eienskappe van 'n maatskappy met die van ander maatskappye. Die Gebeurlikheids Waardasie metode koppel waarde aan die feit dat besluite uitgestel kan word totdat meer informasie beskikbaar is. Die basis van hierdie tegniek is Opsie Teorie waarin die Black-Scholes tegniek en binomiaal model gebruik word. Hierdie metode word gewoonlik gebruik waar bates "opsie-tipe" eienskappe besit soos aandeelhouding in 'n maatskappy, natuurlike mynregte; produk patente of enige besluit wat uitgestel kan word na 'n datum in die toekoms. Besluite (opsies) wat uitgestel word kan geïdentifiseer word as groei-, stap-vir-stap-, buigbaarheids-, uittree-, lerings- en uitbreidingsopsies. Hierdie metode staan ook bekend as die Ware Opsie Prysings Teorie. Volgens hierdie metode kan 'n beleggingsgeleentheid voorgestel word as 'n reeks koopopsies (Luehrman, 1998a). Die totale uitgawe word voorgestel deur die uitoefeningsprys (X), die teenswoordige waarde van die bate word voorgestel deur die aandeel waarde (S), die tydperk wat die besluit uitgestel kan word, word voorgestel deur die opsie vervaltyd (t), en die onsekerheid van die bate se kontantvloeistroom word voorgestel deur die standaardafwyking van die opbrengs van die bate (c). Sewe stappe word geneem om die waarde van die koopopsie te bepaal wat uitgedruk word deur twee opsiewaarde komponente naamlik waarde-tot-koste (NPVq) en kummulatiewe volatiliteit ((1'Jt). Die twee komponente word grafies voorgestel (genoem Opsie Spasie) om resultate te visualiseer en te interpreteer. Mushroom Biomedical Systems het drie unieke en gepatenteerde produkte ontwikkel. Die maatskappy is met die konvensionele VKS metode gewaardeer en volgens Luehrman (1998a) se Ware Opsie Prysings model as 'n stap-vir-stap opsie gewaardeer. Die waardes van twee van die produkte is dieselfde met die VKS metode en die Opsie Teorie metode. Die meeste van die kapitaal is tydens die eerste fases van die twee produkte benodig met die gevolg dat die tweede fases nie veel risiko of waarde inhou nie. Die waarde van die derde produk is aansienlik meer met die Opsie Teorie metode in vergelyking met die VKS metode. Dit word toegeskryf aan die gedwonge vertraging van fase een. Die waarde gekoppel daaraan om die besluit in die toekoms te neem is meer werd as om die besluit nou te neem a.g.v. verwagte nuwe informasie. Deur hierdie opsie "te skep" word waarde toegevoeg omdat bestuur gedwing word om aktief twee besluite in die toekoms te neem rakende die voortsetting van die projek. Die gebruik van Ware Opsie Prysings Teorie skep 'n inherente waarde wanneer daar verskillende besluite geneem kan word soos mark kondisies verander. Met die VKS metode word risiko gesien as 'n faktor wat waarde laat afneem. In teenstelling hiermee dui die Ware Opsie Teorie dat risiko beïnvloed kan word deur bestuur se vermoëns, wat 'n belangrike instrument is vir waardeskepping.

Thesis (MBA (Business Management))--Stellenbosch University, 2008.
ENGLISH ABSTRACT: The sustainable growth rate of a company is investigated, by comparing the self-financeable growth rate as defined by Churchill and Mullins (2001), with the cash flow sustainable growth rate as defined by Hamman (1996). The purpose of this research is to identify the behaviour, characteristics and benefits that each rate displays by investigating changes in sales growth, profit margins, working capital and cash flow analysis. The biggest difference between the self-financeable growth rate (Churchill & Mullins, 2001) and the cash flow sustainable growth rate (Hamman, 1996) is the definition of cash as generated from sales (self-financeable growth rate) and cash generated from operating activities (cash flow sustainable growth rate). Cash generated from sales includes accounts receivable or payable, and represents the amount of cash that is available to reinvest in the growth of a company (according to the self-financeable growth rate). Because this cash (calculated for the self-financeable growth rate) is not immediately realised, the cash flow sustainable growth rate (based on cash flow from operating activities) represents a better measurement of cash available for reinvestment. If the percentage sales growth is less than the cash flow sustainable growth rate (Hamman, 1996), a positive sustainable cash flow from operating activities will be generated. The report also shows this to be true, when the self-financeable growth rate is less than or equal to the cash flow sustainable growth rate. When the growth in sales exceeds the cash flow sustainable growth rate, negative cash flow from operating activities is experienced. This is an indication that internal funding to support the working capital requirements is insufficient and external funding is required. In this investigation the self-financeable growth rate (Churchill & Mullins, 2001), always reflects a positive cash flow from operating activities, regardless of whether the percentage sales growth is higher or lower than that of the self-financeable growth rate. This leads to the question: What check is used to ascertain a company's sustainable performance when using the self-financeable growth rate? That is, if the self-financeable growth rate is exceeded by the sales growth, what indicator becomes relevant under the specific circumstances? As highlighted by Churchill and Mullins (2001), the benefits of sustainable growth rates, provide insight into the short and long-term decisions in a company with regards to: • Reducing overall costs • Changing the profit margins • Managing the working capital requirements • Changing the operating cash cycle. What matters most is not how fast a company can grow its business, but the way in which it is managed. Increasing competitiveness requires innovative ways of optimising resources, but without efficient management of cash flow, a company is most likely to fail. This report, illustrates that, compared to the self-financeable growth rate, the cash flow sustainable growth rate is a more effective tool, in addressing sustainable growth and the management of cash.
AFRIKAANSE OPSOMMING: 'n Maatskappy se volhoubare groeikoers word ondersoek deur 'n vergelyking te tref tussen die self-gefinansierde groeikoers van Churchill en Mullins (2001), en die kontantvloei volhoubare groeikoers van Hamman (1996). Die doel van die navorsing, is om die verandering in verkope, winsgrense, bedryfskapitaal en die kontantvloei ontleding te ondersoek, ten einde die aard, kenmerke en voordele van die groeikoerse te bepaal. Die grootste verskil tussen die self-gefinansierde groeikoers van Churchill en Mullins (2001), en die kontantvloei volhoubare groeikoers van Hamman (1996) is die definisie van die kontant gegenereer uit verkope (self-gefinansierde groeikoers) en die kontant gegenereer uit bedryfsaktiwiteite (kontantvloei volhoubare groeikoers). Kontant gegenereer uit verkope sluit in rekeninge ontvangbaar of betaalbaar en verteenwoordig die bekikbaarheid van kontant wat herbele kan word in 'n maatskappy se groei (volgens die self-gefinansierde groeikoers). Omdat die kontant (self-gefinansierde groeikoers) nie ommiddelik gerealiseer kan word nie, is die kontantvloei volhoubare groeikoers (kontant gegenereer uit bedryfsaktiwiteite) 'n beter verteenwoordiger van beskikbare kontant wat herbele kan word. As die presentasie groei in verkope minder is as die kontantvloei volhoubare groeikoers (Hamman, 1996) sal 'n positiewe volhoubare kontantvloei vir bedryfsaktiwiteite gegenereer word. Die verslag dui aan dat bogenoemde ook geld, as die self-gefinansierde groeikoers kleiner of gelyk is aan die kontantvloei volhoubare groeikoers. Wanneer die groei in verkope groter word as die kontantvloei volhoubare groeikoers, word negatiewe kontantvloei vir bedryfsaktiwiteite gegenereer. Hierdie is 'n aanduiding dat die interne befondsing wat benodig word om die bedryfskapitaal te bevredig, nie voldoende is nie en eksterne befondsing benodig word. In hierdie ondersoek reflekteer die self-gefinansierde groeikoers (Churchill & Mullins, 2001) altyd 'n positiewe kontantvloei vir bedryfsaktiwiteite, ongeag of die groei in verkope groter of kleiner is as die van die self-gefinansierde groeikoers. Dit lei tot die volgende vraag: Watter maatslaf word gebruik om die volhoubare groei van 'n maatskappy te bepaal as die self-gefinansierde groeikoers toegepas word? Anders gestel, as die groei in verkope, die self-gefinansierde groeikoers oorskry, watter toepaslike aanduiding is relevant onder hierdie omstandighede? Soos beklemloon deur Churchill en Mullins (2001), gee die voordele van volhoubare groeikoerse, insig in kort en langtermyn besluite in 'n maatskappy met betrekking tot: • Vermindering van totale koste • Verandering in winsgrense • Bestuur van bedryfskapitaal behoeftes • Verandering in die bedryfs kontant siklus. Wat van belang is, is nie hoe vinnig 'n maatskappy kan groei nie, maar wat die beste manier is, om dit te bestuur. 'n Verhoging in kompetisie, benodig innoverende maniere om bronne te kan optimiseer en sonder effektiewe betuur van kontant, bestaan die moontlikheid dat 'n maatskappy hierin kan misluk. Hierdie verslag illuslreer, deur te vergelyk met die van die self-gefinansierde groeikoers, dat die kontantvloei volhoubare groeikoers 'n beter, effektiewe maatstaf is, wat betref die adressering van volhoubare groei en die bestuur van kontant.

Business leaders remain exposed to financial and accounting fraud as well as loss of profitability, despite the dictates of the SOX Act of 2002. The most challenging aspect of corporate management is the unexpected nature of an emerging, existing, or an inherent financial risk. Guided by the evolution of fraud theory, this exploratory case study's purpose was to identify and explore the financial management strategies that corporate financial managers need to adequately protect investors. Twenty participants from a population group of corporate auditors of Fortune 1000 corporations within 70 miles of Columbus, Ohio provided input for this study. Data from the interviews were analyzed through coding, reviewing, categorizing, and combining common statements. The research findings included themes of knowledge and types of risks; the impact of financial fraud and risks on investment; the impact of accounting, auditing, and financial reporting standards; as well as financial management training to minimize audit expectations. These themes formed the focus of exploring the financial management strategies that corporate financial managers need to adequately protect investors and investments. In addition to the antifraud measures, financial managers may detect and control inherent risks in emerging opportunities for positive social change that includes enhanced knowledge in diversification of investments, an increase in economic resources, economic growth, and greater employment in the United States.

An initial public offering (IPO) of equity provides a significant source of finance for Malaysian companies. Due to the existence of inequalities of wealth within Malaysian society as a result of its colonial heritage, the government has used IPOs to redistribute wealth among ethnic groups with the main objective being to increase the involvement of the Bumiputera (local indigenous people) in the corporate sector. This thesis consists of three inter-related studies on Malaysian IPOs that were listed on the Bursa Malaysia (formerly known as the Kuala Lumpur Stock Exchange) during the period 1990 to 2000. In particular, this study investigates post-IPO performance using alternative performance approaches (market-based and accounting-based) and the earnings management explanation for observed performance. The results from the first study indicate that Malaysian IPOs significantly overperform their benchmarks when performance is measured using both equally-weighted cumulative abnormal returns (CARs) and buy-and-hold abnormal returns (BHARs), except when matched companies are used as the benchmark. However, this significant overperformance disappears when returns are calculated on a value-weighted basis and also when Fama-French (1993) three-factor regressions are employed. Cross-sectional analysis reveals differential performance related to year of listing, issue proceeds and initial returns. The results from the second study using accounting-based measures provide strong evidence of declining operating performance in the IPO year and up to three years following an IPO. The year-to-year analysis reveals that the declining performance is greatest in the year immediately following the IPO. The deterioration in performance is more pronounced when accrual-based operating performance measures are used. The difference in the results using accrual-based and cash flow-based approaches suggests the existence of earnings manipulation by the IPO manager. The investigation of the possible sources of operating performance changes suggests that post-IPO declines in asset turnover parially explain the poorer operating performance. Univariate analysis of the association between family relationships, retained ownership and post-IPO operating performance produces little evidence to explain the deterioration in operating performance. However, underpricing partially explains the deterioration when the cash flow-based performance measure is used. The results from the third study reveal that Malaysian IPO companies employ income-increasing strategies around offerings, and that these strategies were more prevalent during the East Asian crisis period, especially for those companies that provided a profit guarantee. Analysis of the assöciation between the magnitude of earnings management in the IPO year and post-IPO performance provides some evidence to support the view that aggressive earnings management at the time of an IPO subsequently leads to poor stock market and operating performance. Overall, the evidence in this thesis supports the consensus that has emerged from the international debate on studies involving long horizon returns, which suggests that the magnitude of long run performance depends on the method employed to measure performance. The evidence derived from the accounting-based measure of operating performance supports the existing international evidence that operating performance declines following IPOs. The results also provide a degree of support for the earnings management explanation of post-IPO performance. These findings have implications for investors, security analysts, companies and accounting standard setters.

Thesis (MBA)--Stellenbosch University, 1993.
ENGLISH ABSTRACT: Cash flow information is important in evaluating the financial results of companies. As cash flow statements were only prepared since October 1988 as part of Generally Accepted Accounting Practice various assumptions were made in calculating cash flow information for earlier years. In a study by Wessels (1991) a few approximate methods were used to calculate cash flow from operating activities. For this study an analysis was again made of the same companies. In this latest study it is concluded that the assumptions of the previous study could be wrong. It is therefore suggested that the assumptions and results of the previous study be re-evaluated.
AFRIKAANSE OPSOMMING: Kontantvloei-inligting is belangrik by die evaluering van maatskappyresultate en daarom word aannames dikwels gebruik om die inligting voor Oktober 1988 te bereken . Die rede hiervoor is dat kontantvloeistate as deel van Algemeen Aanvaarde Rekeningkundige Praktyk eers sedert Oktober 1988 gepubliseer is . In In studie van Wessels (1991) is gebruik gemaak van 'n aantal benaderde metodes om kontant uit bedryfsaktiwiteite te bereken. 'n Ondersoek na dieselfde maatskappye wat toe gebruik is, is weer in hierdie studie gedoen. Die gevolgtrekking wat in hierdie studie gemaak word, is dat die aannames van Wessels moontlik foutief kon wees. Daar word aanbeveel dat die studie van Wessels en die gevolgtrekkings waartoe gekom is, herevalueer moet word.

Thesis (MBA)--Stellenbosch University, 2009.
ENGLISH ABSTRACT: In financial accounting and economics it is important to be in a position to determine replacement costs of assets. These costs are essential for application of inflation accounting , the calculation of Tobin's q ratio, as well as the calculation of the free cash flow (FCF) of a company. However, it proves to be a daunting challenge to calculate especially accurate replacement costs of a company's fixed assets, owing to the considerable effects that inflation, economic lifetime of fixed assets and procurement strategies have on the replacement cost, and consequently on the FCF of a firm . In determining the FCF of a company, it is essential to differentiate between the goals of a company to maintain fixed assets or to expand operations. This split is difficult to ascertain, as few companies in South Africa publish the split. In addition to this, it is important to distinguish between actual required replacement investment (RI) and that part of the RI that has conveniently been postponed. As a consequence, analysis of a company's financial statements to determine replacement costs and subsequent FCF is further complicated. In 2001 , Hall investigated the behaviour of the average age of fixed assets as calculated with the Cutler and Westwick (1973: 17) formula , by developing specific inflation adjustment models. Hall's (2001: 40) study provided insight into some of the factors that might influence the application of the Cutler and Westwick formula for the calculation of the average age of a firm 's fixed assets. This research report developed Hall's models further, and proved that the average age of fixed assets, as used in the determination of replacement cost of a company's fixed assets, could only be applied in zero inflation conditions. In positive inflation periods, the average age of fixed assets as per Cutler and Westwick's formula is understated, resulting in lower estimations of replacement costs. Consequently, the additional depreciation as determined for inflation accounting purposes is understated. In this research report, the models referred to above were developed further to determine the required maintenance (or RI) part of the investing decision relative to depreciation written off. This enabled the modelling of FCF for companies, assuming certain model restrictions, such as constant inflation, evenroll fixed asset replacement and similar economic lifetimes for all fixed assets. However, this only provides some insight into the trends of additional deprecation required for different situations, and cannot be used in practice as comparable practical situations do not exist. This study therefore concludes that the calculation of replacement cost for inflation accounting purposes proves to be a very complex problem. No simple or quick model currently exists for determining the replacement costs of fixed assets and subsequent FCF of a firm. It is recommended that, when determining the replacement costs of fixed assets, the detailed fixed asset register of the firm should be consulted in order to determine the unique asset investment and replacement strategies, as well as the split of the fixed assets in terms of different economic lifetimes. Once this information is available, unique models per company could be developed based on the applicable inflation rates.
AFRIKAANSE OPSOMMING: In finansiële rekeningkunde en ekonomie is dit belangrik om die vervangingswaarde van bates te kan bereken. Hierdie waardes is essensieël vir die toepassing van inflasieboekhouding, die berekening van Tobin se q-verhouding, sowel as die berekening van die vrye kontantvloei (VKV) van 'n maatskappy. Dit blyk egter 'n moeilike taak te wees om veral akkurate vervangingswaardes vir 'n maatskappy se vaste bates te bereken, as gevolg van die groet invloed wat inflasie, die ekonomiese leeftyd van die vaste bates en aankoopstrategieë het op die vervangingswaarde, en gevolglik op die VKV van 'n maatskappy. In die bepaling van die VKV van 'n maatskappy, is dit noodsaaklik om te onderskei tussen die doelwitte van die maatskappy om vaste bates te onderhou of om werksaamhede uit te brei. Hierdie onderskeid is moeilik om te bepaal, aangesien min maatskappye in Suid-Afrika dit publiseer. Ook is dit belangrik om te onderskei tussen werklik benodigde vervangingsinvestering (VVI) en daardie gedeelte van die VVI wat gerieflikheidshalwe uitgestel is. Die ontleding van 'n maatskappy se finansiële state ten einde vervangingswaarde en die daaropvolgende VKV te bereken, word gevolglik verder gekompliseer. In 2001 het Hall die gedrag van die gemiddelde ouderdom van vaste bates ondersoek met behulp van die Cutler en Westwick (1973: 17) formule, deur spesifieke inflasie aangepaste modelle te ontwikkel. Hall (2001 : 40) se studie het insig gebied in sommige van die faktore wat die toepassing van die Cutler en Westwick formule vir die berekening van die gemiddelde ouderdom van 'n maatskappy se vaste bates kan beïnvloed. Hierdie navorsingsverslag ontwikkel Hall se modelle verder en bewys dat die gemiddelde ouderdom van vaste bates, soos gebruik in die beraming van die vervangingswaarde van 'n maatskappy se vaste bates, net toegepas kan word in toestande van nul inflasie. In periodes van positiewe inflasie word die gemiddelde ouderdom, soos bepaal deur die Cutler en Westwick formule, te laag opgegee, met 'n gevolglike laer skatting van vervangingswaarde. Dit lei daartoe dat die addisionele waardevermindering, soos bepaal vir inflasieboekhoudingsdoeleindes, te laag opgegee word. In hierdie navorsingsverslag word die modelle waarna hierbo verwys is verder ontwikkel ten einde die vereiste instandhoudings- (of VVI-) gedeelte van die investeringsbesluit relatief tot waardevermindering te bepaal. Dit maak dit moontlik om die VKV van maatskappye te modelleer, met sekere modelbeperkings wat veronderstel word, soos konstante inflasie, vaste batevervanging volgens 'n harmonies opgeboude masjienpark, en soortgelyke ekonomiese leeftye vir aile vaste bates. Dit bied egter net 'n mate van insig in die patrone van addisionele waardevermindering wat vir verskillende situasies benodig word en kan nie in die praktyk aangewend word nie, aangesien vergelykbare praktiese situasies nie bestaan nie. Hierdie studie kom dus tot die gevolgtrekking dat die berekening van vervangingskostes vir die toepassing van inflasieboekhouding 'n baie komplekse probleem is. Geen maklike of vinnige model bestaan tans vir die bepaling van die vervangingswaarde van vaste bates en die gevolglike VKV van 'n maatskappy nie. Daar word aanbeveel dat, wanneer die vervangingswaarde van vaste bates bereken word, die gedetailleerde vaste bateregister van die maatskappy geraadpleeg moet word ten einde die unieke investering- en vervangingstrategieë, sowel as die skeiding van die vaste bates op grand van verskillende ekonomiese leeftye, te kan bepaal. Sodra hierdie inligting beskikbaar is, kan unieke modelle vir die maatskappy ontwikkel word op grand van die toepaslike inflasiesyfers.

Thesis (MBA)--Stellenbosch University, 2008.
ENGLISH ABSTRACT: The purpose of this study was to investigate the relationship between dividend changes and operating cash flows in South Africa. Previous studies on the relationship in developed markets established that the main determinants of dividend changes are current year earnings and preceding dividend levels. The dividend changes-operating cash flows relationship was successfully studied in the developing market of Nigeria. The procedures and arguments used in this study were largely based on studies undertaken by Charitou and Vafeas (1998) and Adelegan (2003). The relationship was studied by selecting 60 companies that have been listed on the Johannesburg Stock Exchange from 1990 to 2005. A multiple regression model was used in this study to investigate the relationship between dividend changes and operating cash flows. The multiple regression results revealed that there is a significant positive relationship between dividend changes and operating cash flows. The results also revealed that there is a significant positive relationship between dividend changes and profits after tax and a significant negative relationship between dividend changes and the previous year's dividend yield. Relative to profit after tax and operating cash flows, the previous year's dividend yield has the strongest relationship with dividend changes. The strength of the variables in explaining dividend changes has changed over time. In the study, the multiple regression equation was estimated for three different periods, 1990 to 1993, 1994 to 1999 and 2000 to 2005. In the period 1994 to 2005, operating cash flows showed a significant positive relationship with dividend changes. In all three periods, the previous year's dividend yield showed a significant negative relationship with dividend changes and was also relative to profit after tax and operating cash flows, the strongest determinant of dividend changes in all three periods. In the period 1990 to 1999, profits after tax had a significant positive relationship with dividend changes. The results showed that operating cash flows, over time explain more of dividend changes than profits after tax. The study also investigated factors that have the potential to influence the relationship between dividend changes and operating cash flows. The multiple regression results revealed that growth prospects, levels of leverage and the size of a company did not significantly influence the dividend changes-operating cash flows relationship.
AFRIKAANSE OPSOMMING: Die doel van hierdie studie was om die verwantskap tussen dividendveranderinge en kontant uit bedryfsaktiwiteite te ondersoek. Vorige studies oor die verwantskap wat met betrekking tot ontwikkelende markte onderneem is, het bevind dat die hoof determinante van dividendveranderinge die huidge jaar se verdienste en die voorafgaande jaar se dividendopbrengste is. Die dividendveranderinge-kontant uit bedryfsaldiwiteite verwantskap is suksesvol bestudeer in die ontwikkelende mark van Nigerië. Die prosedures en argumente wat gebruik is in hierdie studie is hoofsaaklik op die studies van Charitou en Vafeas (1998) en Adelegan (2003) gebaseer. Die verwantskap is bestudeer deur 60 maatskappye te selekteer wat vanaf 1990 tot 2005 op die Johannesburg se Effektebeurs genoteerd was. 'n Meervoudige regressie model is in die studie gebruik om die verwantskap tussen dividendveranderinge en kontant uit bedryfsaktiwiteite te ondersoek. Die meervoudige regressieresultate het gewys dat daar 'n positiewe betekenisvolle verwantskap tussen dividend veranderinge en kontant uit bedryfsaktiwiteite is. Die resultate het ook gewys dat daar 'n positiewe betekenisvolle verwantskap is tussen dividendveranderinge en wins na belasting asook, 'n negatiewe betekenisvolle verwantskap tussen dividendveranderinge en die voorafgaande jaar se dividendopbrengs. Relatief tot wins na belasting en kontant uit bedryfsaktiwiteite, het die voorafgaande jaar se dividendopbrengste 'n sterker verwantskap met dividendveranderinge gehad. Die sterkte van die veranderlikes in die verduideliking van dividendveranderinge het met verloop van tyd verander. Die meervoudige regressie vergelyking is in die studie vir drie verskillende periodes geraam, naamlik vir 1990 tot 1993, 1994 tot 1999 en 2000 tot 2005. In die periode 1994 tot 2005 was daar 'n positiewe betekenisvolle verwantskap tussen dividendveranderinge en kontant uit bedryfaktiwiteite. Al drie periodes het 'n negatiewe betekenisvolle verwantskap tussen dividendveranderinge en die voorafgaande jaar se dividendopbrengs getoon. Die voorafgaande jaar se dividendopbrengs was ook relatief tot wins na belasting en kontant uit bedryfsaktiwiteite die sterkste determinant van dividendveranderinge in al drie periodes. Daar was 'n positiewe betekenisvolle verwantskap tussen dividendveranderinge en wins na belasting in die periode van 1990 to 1999. Die resultate toon dat kontant uit bedryfsaktiwiteite met verloop van tyd meer verklaar van dividendverandringe as wins na belasting. Die studie het ook faktore wat die verwantskap tussen dividendveranderinge en kontant uit bedryfsaktiwiteite potensieël kan beïnvloed, ondersoek. Die meervoudige regressieresultate het getoon dat groeimoontlikhede, hefboomfinansiering en die grootte van 'n maatskappy nie die verwantskap tussen dividendveranderinge en kontant uit bedryfsaktiwiteite betekenisvol beïnvloed nie.

Thesis (MBA)-- Stellenbosch University, 1995.
ENGLISH ABSTRACT: The price of shares is determined primarily by investors' current expectations about the future values of variables that measure the relevant aspects of a company's performance and profitability, particularly the anticipated growth rate of earnings per share. Empirically, no model estimated with only historical senes data has been found to have greater forecast accuracy than the random walk model in estimating earnings one period ahead. This has led to the conclusion that past and future earnings growth is uncorrelated and that only year t-l earnings are useful in forecasting year t earnings. Research by Mozes in the USA has found the opposite and his model is applied to the South African situation. The aim is to determine whether the Mozes model has greater forecasting accuracy in the prediction of earnings per share than the random walk model. The present study shows that the Mozes model has greater forecast accuracy in the prediction of earnings per share than the random walk model if the following criteria are met: the company must be classified as a large company in terms of market capitalisation; or the percentage increase in earnings per share must be large; and the earnings per share must be classified in the growth mode. It is demonstrated that if these criteria are met, the historical growth in earnings and the future growth in earnings are positively correlated and not distributed at random. If earnings per share is classified in the non~growth mode, the random walk model is more accurate in the prediction of earnings per share than the Mozes model and as such, only the earnings per share of year t-l is important in forecasting year t's earnings per share. The most important conclusion from the study is that earnings per share in the South African market is not always randomly distributed.
AFRIKAANSE OPSOMMING: Die prys van aandele word primer bepaal deur beleggers se huidige verwagtinge rakende die toekomstige waarde van veranderlikes wat relevante aspekte van die maatskappy se prestasie en winsgewendheid beinvloed, meer spesifiek die geantisipeerde groei in verdienste per aandeel. Empiriese studies het bevind dat die toevalslopie-model die grootste akkuraatheid in die vooruitskatting van verdienste vir een periode in die toekoms lewer indien van historiese tydreeksdata gebruik gemaak word. Die gevolgtrekking word dus gemaak dat groei in verdienste van die verlede en die toekoms nie gekorreleerd is nie en dat slegs jaar t-1 se verdienste belangrik is in die vooruitskatting van jaar t se verdienste. Navorsing deur Mozes in die VSA het die teendeel getoon en die model is in die ondersoek toegepas op Suid-Afrikaanse data om te bepaal of dieselfde bevindinge geld. Resultate van hierdie studie toon dat daar aan die volgende kriteria voldoen moet word alvorens die Mozes-model meer akkurate vooruitskattings van verdienste per aandeel lewer as die toevals-Iopiemodel : -die maatskappy behoort as 'n groot maatskappy geklassifiseer te wees volgens markkapitalisasie; of -die persentasieverandering in verdienste per aandeel behoort groot te wees; en -indien verdienste per aandeel as synde in die groeifase geklassifiseer is. Indien aan die kriteria voldoen word, is aangetoon dat historiese groei in verdienste en toekomstige groei in verdienste gekorreleerd is en nie ewekansig versprei is nie. In die gevalle waar verdienste per aandeel as synde in die nie-groeifase geklassifiseer is, lewer die toevalslopie-model oorheersend meer akkurate vooruitskattings van verdienste per aandeel as die Mozes-model en gevolglik is daar bevind dat slegs jaar t ~ 1 se verdienste per aandeel belangrik is vir die vooruitskatting van jaar t se verdienste per aandeel. Die belangrikste afleiding vanuit die studie is gevolglik dat verdienste per aandeel in die SuidAfrikaanse mark nie in aile gevalle sonder meer ewekansig versprei is nie.

Thesis (MBA)--Stellenbosch University, 2005.
ENGLISH ABSTRACT: This study project explains the theory of Leveraged-Buy-Outs and describes the different financial tools than can be used. Special emphasis is laid in the capital structure of a Leveraged-Buy-Out and its impact on the return for the investor. The theory is then put in perspective by giving insight in the case study of the Cognis Group, a speciality chemicals company, based in Germany. It was sold to Private Equity companies in 2001 and since then underwent various refinancing including the issuing of High Yield Bonds and the issuing of Payment-In-KindNotes.
AFRIKAANSE OPSOMMING: Die teorie rakende gehefboomde bestuuroornames en die gebruik van verskillende finansiele instrumente by bestuursoornames word in hierdie werkstuk beskryf. Klem word gelê op die impak wat 'n verandering in die kapitaalstruktuur van die maatskappy op die belegger kan hê as gevolg van 'n gehefboomde bestuursoorname. Die teorie word toegelig deur te vervvys na die Cognis Groep maatskappye in Duitsland as gevallestudie. Die maatskappy het 'n bestuursoorname ondergaan in 2001 asook verskeie veranderinge in die kapitaalstruktuur daarna waar onder andere gebruik gemaak was van lae gehalte effekte.

Thesis (PhD)-- Stellenbosch University, 2014.
ENGLISH ABSTRACT: Mainstream investors are mostly interested in how they can benefit financially from a specific investment. Although this is the case, an increasing number of so-called responsible investors are also beginning to integrate environmental, social and corporate governance (ESG) aspects into their investment analysis and ownership practices. Corporate governance compliance is often the first level of ESG interest for these investors. Previous researchers considered the relationship between corporate governance and various financial performance measures, but reported inconclusive evidence on the nature of the relationship. Even though the three King Reports provide a well-developed framework for corporate governance compliance in South Africa, no comprehensive academic study has previously been conducted on the above-mentioned relationship in the South African context. The primary objective of the current study was therefore to investigate the relationship between corporate governance and the financial performance of selected JSE industries. The chosen study period (20022010) coincided with the launch of the King II Report and included the 20072009 global financial crisis. A combination of convenience and judgement sampling was used to draw a sample from six JSE industries. In an attempt to reduce survivorship bias, the sample included both listed firms and firms that had delisted during the study period. The complete sample comprised 227 companies (1 417 annual observations). When the study commenced, there was a lack of reliable, readily available ESG data for JSE-listed firms. An existing corporate governance research instrument was therefore refined to develop standardised data on the corporate governance compliance of the selected firms. An annual corporate governance score (CGS) was compiled for each of the firms by means of content analysis of its annual reports. Five financial performance variables were considered, namely return on assets (ROA), return on equity (ROE), earnings per share (EPS), total share return (TSR) and risk-adjusted abnormal return (alpha). The selection of these measures was based on previous research. The secondary financial data were sourced from the McGregor BFA database and the Bureau for Economic Research. The resulting panel dataset was analysed by means of various descriptive and inferential analyses. The descriptive statistics revealed an overall increasing corporate governance compliance trend. Both the disclosure and acceptability dimensions of the sample companies’ CGSs improved over time. The sample firms complied with approximately 68 per cent of the corporate governance criteria on average. The panel regression analysis showed a significant positive relationship between CGS and the accounting-based EPS ratio. Although this result is encouraging, it should be kept in mind that managers can have an influence on both these variables. On the other hand, a significant negative relationship was observed between the market-based TSR measure and CGS. The TSR measure is not adjusted for risk. Risk-adjusted abnormal returns were thus also estimated for four corporate governance-sorted portfolios. In a positive change of events, both the capital asset pricing model (CAPM) and the FamaFrench three-factor estimations showed positive alphas for the portfolio consisting of firms with the highest CGSs. These encouraging results were observed for the overall study period and the period before May 2008. Investors could thus have benefitted, in risk-adjusted terms, by investing in the sample firms with high corporate governance compliance. In the period after May 2008, the FamaFrench three-factor estimations revealed that the risk-adjusted market-based performance of almost all the sample firms were negatively affected by the global financial crisis of the late 2000s. The reported alphas for this period were, however, not significant. Based on these results, the researcher recommends that directors, managers and shareholders should consider the valuable opportunities associated with sound corporate governance compliance, rather than merely regarding it as a “tick-box” obligation.
AFRIKAANSE OPSOMMING: Hoofstroombeleggers is veral geïnteresseerd in hoe hulle finansieel by ʼn spesifieke belegging kan baat. Alhoewel dit die geval is, begin ʼn toenemende aantal sogenaamde ‘verantwoordelike beleggers’ ook die omgewing, sosiale en korporatiewe bestuursaspekte (ESG-aspekte) in hulle beleggingsanalise en eienaarskapspraktyke integreer. Korporatiewe bestuursnakoming is dikwels die eerste vlak van ESG-belangstelling vir hierdie beleggers. Vorige navorsers het die verwantskap tussen korporatiewe bestuur en verskeie maatstawwe van finansiële prestasie ondersoek, maar het onbesliste resultate ten opsigte van die aard van die verhouding gerapporteer. Ongeag die drie King-verslae wat ʼn goed ontwikkelde raamwerk vir die nakoming van korporatiewe bestuur in Suid-Afrika verskaf, is daar tot dusver nog geen omvattende akademiese studie oor die bogenoemde verwantskap in Suid-Afrika gedoen nie. Die primêre doelstelling van hierdie studie was dus om die verwantskap tussen korporatiewe bestuur en die finansiële prestasie van JSE-genoteerde maatskappye te ondersoek. Die geselekteerde studie tydperk (2002-2010) het die wêreldwye finansiële krisis van 2007-2009 ingesluit en het saamgeval met die bekendstelling van die King II-verslag. ʼn Kombinasie van gerieflikheids- en oordeelkundige steekproefneming is gebruik om ʼn steekproef vanuit ses JSE-nywerhede te selekteer. In ʼn poging om oorlewingsydigheid te verminder, het dié steekproef sowel genoteerde maatskappye as maatskappye wat gedurende die studietydperk gedenoteer het, ingesluit. Die volledige steekproef het uit 227 maatskappye (1 417 jaarlikse waarnemings) bestaan. Met die aanvang van die studie was daar ʼn gebrek aan betroubare, geredelik beskikbare ESG-data vir JSE-genoteerde maatskappye. ʼn Bestaande navorsingsinstrument vir korporatiewe bestuursnakoming is dus verfyn om gestandaardiseerde data rakende die gekose maatskappye se korporatiewe bestuursnakoming te verkry. ʼn Jaarlikse korporatiewe bestuur telling (CGS) is deur middel van inhoudsanalise van die betrokke maatskappy se jaarstate vir elk van die maatskappye saamgestel. Vyf finansiële prestasie veranderlikes is oorweeg, naamlik ondernemingsrentabiliteit (ROA), rentabiliteit van ekwiteit (ROE), verdienste per aandeel (EPS), totale aandeelopbrengs (TSR) en risiko-aangepaste abnormale opbrengs (alfa). Die keuse van hierdie maatreëls was op vorige navorsing gegrond. Die sekondêre finansiële data was afkomstig van die McGregor BFA-databasis en die Buro vir Ekonomiese Ondersoek. Verskeie beskrywende en inferensiële analises is gebruik om die gevolglike paneeldatastel te ontleed. Die beskrywende statistiek het gedui op ʼn algeheel toenemende tendens in korporatiewe bestuursnakoming. Beide die bekendmaking- en aanvaarbaarheidsdimensies van die steekproef maatskappye se CGS’s het met verloop van tyd verbeter. Die steekproef maatskappye het gemiddeld aan ongeveer 68 persent van die korporatiewe bestuurskriteria voldoen. Die paneel regressie-analise het ʼn beduidende positiewe verwantskap tussen CGS en die rekeningkundig-gebaseerde EPS-verhoudingsgetal getoon. Alhoewel die resultaat bemoedigend is, moet daar in gedagte gehou word dat bestuurders ʼn invloed op beide hierdie veranderlikes kan hê. Aan die ander kant is ʼn beduidende negatiewe verband tussen die markgebaseerde TSR-maatstaf en CGS waargeneem. Die TSR-maatstaf is nie vir risiko aangepas nie. Risiko-aangepaste abnormale opbrengste is dus ook bepaal vir vier korporatiewe bestuursgesorteerde portefeuljes. In ʼn positiewe wending het beide die kapitaal-bate prysmodel (CAPM) en die FamaFrench drie-faktor beramings positiewe alfas vir die portefeulje bestaande uit maatskappye met die hoogste CGS’s getoon. Hierdie bemoedigende resultate is vir die volle studietydperk en die tydperk voor Mei 2008 gerapporteer. Beleggers kon dus, in risiko-aangepaste terme, baat gevind het deur in die steekproef maatskappye met hoë korporatiewe bestuursnakoming te belê. In die tydperk ná Mei 2008 het die Fama-French drie-faktor beramings aangetoon dat die risiko-aangepaste markgebaseerde prestasie van byna al die maatskappye in die steekproef negatief geraak is deur die wêreldwye finansiële krisis van die laat 2000’s. Die gerapporteerde alfas vir hierdie tydperk was egter nie beduidend nie. Na aanleiding van hierdie resultate beveel die navorser aan dat direkteure, bestuurders en aandeelhouers die waardevolle geleenthede wat met standvastige korporatiewe bestuursnakoming verband hou oorweeg eerder as om dit bloot as ʼn “afmerk”-verpligting te beskou.

Thesis (MBA (Business Management))--University of Stellenbosch, 2009.
ENGLISH ABSTRACT: For many organisations who wish to sell their debt, or investors who are looking to invest in an organisation, company credit ratings are an important surrogate measure for the marketability or risk associated with a particular issue. Credit ratings are issued by a limited number of authorised companies – with the predominant being Standard & Poor’s, Moody’s and Fitch – who have the necessary experience, skills and motive to calculate an objective credit rating. In the wake of some high profile bankruptcies, there has been recent conjecture about the accuracy and reliability of current ratings. Issues relating specifically to the lack of competition in the rating market have been identified as possible causes of the poor timeliness of rating updates. Furthermore, the cost of obtaining (or updating) a rating from one of the predominant agencies has also been identified as a contributing factor. The high costs can lead to a conflict of interest where rating agencies are obliged to issue more favourable ratings to ensure continued patronage. Based on these issues, there is sufficient motive to create more cost effective alternatives to predicting corporate credit ratings. It is not the intention of these alternatives to replace the relevancy of existing rating agencies, but rather to make the information more accessible, increase competition, and hold the agencies more accountable for their ratings through better transparency. The alternative method investigated in this report is the use of a backpropagation artificial neural network to predict corporate credit ratings for companies in the manufacturing sector of the United States of America. Past research has shown that backpropagation neural networks are effective machine learning techniques for predicting credit ratings because no prior subjective or expert knowledge, or assumptions on model structure, are required to create a representative model. For the purposes of this study only public information and data is used to develop a cost effective and accessible model. The basis of the research is the assumption that all information (both quantitive and qualitative) that is required to calculate a credit rating for a company, is contained within financial data from income statements, balance sheets and cash flow statements. The premise of the assumption is that any qualitative or subjective assessment about company creditworthiness will ultimately be reflected through financial performance. The results show that a backpropagation neural network, using 10 input variables on a data set of 153 companies, can classify 75% of the ratings accurately. The results also show that including collinear inputs to the model can affect the classification accuracy and prediction variance of the model. It is also shown that latent projection techniques, such as partial least squares, can be used to reduce the dimensionality of the model without making any assumption about data relevancy. The output of these models, however, does not improve the classification accuracy achieved using selected un-correlated inputs.
AFRIKAANSE OPSOMMING: Vir baie organisasies wat skuldbriewe wil verkoop, of beleggers wat in ʼn onderneming wil belê is ʼn maatskappy kredietgradering ’n belangrike plaasvervangende maatstaf vir die bemarkbaarheid van, of die risiko geassosieer met ʼn betrokke uitgifte. Kredietgraderings word deur ʼn beperkte aantal gekeurde maatskappye uitgereik – met die belangrikste synde Standard & Poor’s, Moody’s en Fitch. Hulle het almal die nodige ervaring, kundigheid en rede om objektiewe kredietgraderings te bereken. In die nadraai van ʼn aantal hoë profiel bankrotskappe was daar onlangs gissings oor die akkuraatheid en betroubaarheid van huidige graderings. Kwessies wat spesifiek verband hou met die gebrek aan kompetisie in die graderingsmark is geïdentifiseer as ‘n moontlike oorsaak vir die swak tydigheid van gradering opdatering. Verder word die koste om ‘n gradering (of opdatering van gradering) van een van die dominante agentskappe te bekom ook geïdentifiseer as ʼn verdere bydraende faktor gesien. Die hoë koste kan tot ‘n belange konflik lei as graderingsagentskappe onder druk kom om gunstige graderings uit te reik om sodoende volhoubare klante te behou. As gevolg van hierdie kwessies is daar voldoende motivering om meer koste doeltreffende alternatiewe vir die skatting van korporatiewe kredietgraderings te ondersoek. Dit is nie die doelwit van hierdie alternatiewe om die toepaslikheid van bestaande graderingsagentskappe te vervang nie, maar eerder om die inligting meer toeganklik te maak, mededinging te verhoog en om die agentskappe meer toerekenbaar vir hul graderings te maak deur beter deursigtigheid. Die alternatiewe manier wat in hierdie verslag ondersoek word, is die gebruik van ‘n kunsmatige neurale netwerk om die kredietgraderings van vervaardigingsmaatskappye in die VSA te skat. Vorige navorsing het getoon dat neurale netwerke doeltreffende masjienleer tegnieke is om kredietgraderings te skat omdat geen voorafkennis of gesaghebbende kundigheid, of aannames oor die modelstruktuur nodig is om ‘n verteenwoordigende model te bou. Vir doeleindes van hierdie navorsingsverslag word slegs openbare inligting en data gebruik om ʼn kostedoeltreffende en toeganklike model te bou. Die grondslag van hierdie navorsing is die aanname dat alle inligting (beide kwantitatief en kwalitatief) wat benodig word om ʼn kredietgradering vir ʼn onderneming te bereken, opgesluit is in die finansiële data in die inkomstestate, balansstate en kontantvloei state. Die aanname is dus dat alle kwalitatiewe of subjektiewe assessering oor ‘n maatskappy se kredietwaardigheid uiteindelik in die finansiële prestasie sal reflekteer. Die resultate toon dat ʼn neurale netwerk met 10 toevoer veranderlikes op ‘n datastel van 153 maatskappye 75% van die graderings akkuraat klassifiseer. Die resultate toon ook dat die insluiting van kollineêre toevoere tot die model die klassifikasie akkuraatheid en die variansie van die skatting kan beïnvloed. Daar word verder getoon dat latente projeksietegnieke, soos parsiële kleinste kwadrate, die dimensies van die model kan verminder sonder om enige aannames oor data toepaslikheid te maak. Die afvoer van hierdie modelle verhoog egter nie die klassifikasie akkuraatheid wat behaal is met die gekose ongekorreleerde toevoere nie. 121 pages.

Trade between the United States and Africa decreased 32% from US$125 billion, in 2011, to US$85 billion, in 2013; however, MNCs from other regions have continued to increase investments in Africa. Multinational corporations (MNCs) generate most of their return on investment (ROI) from the Western world. Globalization, increasing middle classes in emerging markets, and decreasing population in the Western world have lead to unsustainable ROI. Nigeria, the most populous and largest economy in Africa and the 27th largest economy in the world, offers new opportunities with an annual growth rate forecast of 6% to 8%. Utilizing the diamond theory of competitive advantage of nations, this single case study was an exploration of the strategies that managers of MNCs have used to optimize Nigeria's higher ROI. Interview questions on new entry challenges, operational obstacles, and strategies to mitigate the challenges contributed to answering the overarching research question related to the strategies that managers of MNCs have used successfully to take advantage of Nigeria's high ROI. The participants were 5 executives at the Nigerian operation of a global technology conglomerate with presence in 166 countries. Data collection included a series of semistructured face-to-face interviews. Data analysis using modified van Kaam method resulted in 5 themes: business environment, effective entry strategies, challenges in Nigeria, mitigating challenges in Nigeria, and volatility of Nigerian market and mitigation strategies. Findings may contribute to ROI optimization and influence social change by providing more jobs, thereby increasing standard of living in Nigeria.

Thesis (Ph.D.) - University of Glasgow, 1986.
Ph.D. thesis submitted to the Department of Accounting and Finance, University of Glasgow, 1986. Includes Bibliographical references. Print version also available.

The importance of the capital structure as a measure of company growth and performance has been at the core of vigorous debate for many years. With the threat of the recession and global competitiveness to the survival of organizations, what constitutes an optimal capital structure had to be interrogated. The focus of the study is to investigate the factors (with more emphasis on size) that influence the capital structure of manufacturing firms in general and South African manufacturing firms in particular. The aim is to advance recommendations on policy formulation so as to improve the financial performance of the manufacturing sector in South Africa, a developing economy. The study is explained within the theoretical framework which relates elements purported to have an influence on the capital structure to the use of leverage/debt by organizations. Leverage is seen to increase the shareholders‟ interest whilst being exposed to financial risk. The size of the organizations as a comparative element defines the extent of accessing the borrowed funds, hence the distinction between the Small, Medium and Micro Enterprises (SMMEs) and large sized enterprises (LSEs). The research evidence indicates that SMMEs are characterized by lower liquidity, use more short-term debt instead of use of long-term debt, and are generally low in debt and basically capital intensive. On the contrary LSEs are highly leveraged. The selected research design is triangulated, with a combination of a case study which is of a qualitative and interpretive nature, as well as a quantitative type survey by means of a structured questionnaire. Twenty five ratios were computed from information derived from the financial statements of organizations and means and medians were determined for comparative reasons. The questions were directed to chief financial officers or managers responsible for the compilation of the financial statements, mainly to expand on the debt policy of iv their respective organizations. The findings confirmed the correlation between gearing and size, asset structure and growth with the exception of profitability. On the relevance of financial policy regarding debt, two factors were proven to be influential to capital structure decisions: the theory and practice of capital structure and the impact of the debt policy, both of which relate to financial flexibility. The study concluded that as much as there are similarities/consistencies between the two size groups, there are fundamental differences confirming that size significantly impacts on the capital structure choice specifically the use of debt. It is, therefore, recommended that the South African government should review its policies with regards to the financial support towards SMME viability.

Thesis (MBA (Business Management))--University of Stellenbosch, 2010.
ENGLISH ABSTRACT: NamPower is the current power utility in Namibia and needs to access the debt capital markets over the next few years, in order to be successful to finance its capital expenditure programme of NAD 13.9 billion. NamPower intends to raise the funding from its operations, shareholders equity injection and debt, in the form of bonds and development finance. In order to be successful in its bond issuance programme, NamPower must at least maintain an investment grade credit rating. Credit Rating Agencies play an important role to provide investors with their credit ratings and reports. Many investors base their investment decision making on certain levels of credit ratings. A credit rating is the probability that an issuer or instrument will default on its debt repayment obligation. Depending on the circumstances, investors usually require a minimum of an investment grade rating (AFP, 2009:20). Looking at the current financial crisis investors felt left down by the credit rating agencies, as investors relied on the credit rating reports and the underlying credit rating. Investors literally lost billions in financial crisis of 2007-8/9 as corporate and structured products defaulted on meeting financial obligations. As a result of the defaults and financial crisis the credit rating agencies have been criticised for inadequate disclosure and potential conflicts of interest. Many critics argue that credit rating agencies are not asking inquisitive questioning and probing into issues when doing credit reviews. Evidence was not that conclusive, but big corporate failures like Enron and WorldCom are examples of the credit rating agencies’ failures. Furthermore, credit rating agencies are not particular about creating predictions of future developments, but the last crisis has shown that credit rating agencies were fairly successful with corporate or issuer ratings as default has been fairly limited to the higher credit rating categories. Evidence provided in the research supports that investors still rely on credit ratings more so for corporate, institutions and fixed income products, but are very insure about structured products, due to recent market failures. Therefore it is still of critical importance for NamPower to maintain its investment grade credit rating. NamPower has maintained and even improved on its local national scale credit rating. Investors are still risk adverse since the financial crisis but as economic conditions improve investors should be coming back to emerging markets. To bring back the investors to invest in the emerging markets will require a certain appetite returning to the investor, but surely there will be a premium or funding will be more costly in future and not in demand as previously. As for NamPower, the opinion is therefore that although smaller in size, it poses as an attractive investment opportunity for investors as there is shortage in investment grade assets in Sub-Sahara Africa to fill the portfolio gaps and give diversification.

Thesis (MBA)--Stellenbosch University, 2001.
ENGLISH ABSTRACT: Both the income statement and the cash flow statement of a company provide useful information to the user of financial statements. The net profit after tax in the income statement and the cash from operating activities in the cash flow statement have basically the same transactions as source, however they still differ, because of timing differences between the accrual of income and expenses and the cash receipts or payments thereof, as well as the inclusion of items in the net profit after tax that rather forms part of cash flow from investment activities. A growth in turnover usually coincides with an increase in non-cash working capital. When the company is expanding at too high a rate, too much of his cash resources are taken up by the increase in non-cash working capital and that could lead to cash flow problems. This trend can be plotted on a graph, with a growing net profit after tax and a decline in the cash flow from operating activities. The two lines move away from each other when there is a significant difference between the net profit after tax and the cash flow from operating activities. This study tries to measure the angle between the two lines where they reach the danger zone. Users of financial statements will be able to use this as an indicator of companies that are going to be in cash flow trouble over the next period. In order to measure this angle when the company reaches the danger zone, 365 listed industrial companies were studied. The net profit after tax and the cash flow from operating activities were both transformed into an index, with cash flow relative to net profit. The difference between the index strings was calculated. This study only focuses on companies with an index-difference where the cash flow from operating activities is smaller than the net profit after tax. An index-difference of -2 was identified as the possible danger zone. In order to substantiate this figure, companies with an index-difference of -2 or larger negative that still were listed at the time of the study were examined to find the reason for the difference. Items that do not form part of the cash flow from operating activities cannot be used in the calculation of the index-difference, because it will generate a permanent difference between the net profit after tax and the cash from operating activities. Companies that have a huge negative index-difference only because of such items are not in the danger zone. 33 companies with an index-difference of -2 or more negative were identified. Focus was placed on the thirteen companies that did not have losses and that were still listed at the time of the study. Six of these companies were removed from the danger list after the individual examination, because of other reasons for the difference rather than an increase in non-cash working capital. That leaves seven companies that are shown by this study to be in danger to get into serious cash flow trouble in the foreseeable future. A few additional companies were examined which led to another six companies being placed on the danger list. Only time will tell whether these companies do get into serious financial difficulty. If so, the index-difference can be calculated as an indicator of the point when a company, regardless of a strong growth in turnover, and sometimes because thereof, does not generate enough cash from operating activities to finance the growth in non-cash working capital. Unless the company has a holding company that is willing to pour more cash into the company, or unless the company can do a successful rights issue, it will find itself in the position where it cannot finance the expansion and also cannot obtain more additional funding.
AFRIKAANSE OPSOMMING: Beide die inkomstestaat en kontantvloeistaat van 'n maatskappy verskaf nuttige inligting aan gebruikers van finansiële state. Die netto wins na belasting uit die inkomstestaat en die kontantvloei uit bedryfsaktiwiteite uit die kontantvloeistaat het basies dieselfde transaksies as bron, maar verskil tog, hoofsaaklik vanweë tydverskil in die erkenning van die toevalling van inkomste en uitgawes en die kontantontvangstes en -betalings daarvan, asook vanweë die insluiting van items in die netto wins na belasting wat eerder deel vorm van die kontantvloei uit investeringsaktiwiteite. Wanneer die maatskappy 'n groei in omset toon, gaan dit gewoonlik gepaard met 'n toename in nie-kontant bedryfskapitaal. Wanneer die maatskappy te vinnig groei, word te veel van sy kontantbronne vasgevang in die verhoogde nie-kontant bedryfskapitaal en dit kan lei tot kontantvloeiprobleme. Hierdie tendens kan op 'n grafiek uitgebeeld word met 'n stygende netto wins na belasting, terwyl die kontantvloei uit bedryfsaktiwiteite daal. Wanneer daar 'n aansienlike verskil tussen die netto wins na belasting en die kontantvloei uit bedryfsaktiwiteite is, beweeg die twee lyne uit mekaar. Dié studie poog om die grootte van die hoek tussen die twee lyne wanneer die gevaarsone bereik word, te bepaal. Dit kan dan deur gebruikers van die finansiële state as 'n aanduiding gebruik word om te voorspel watter maatskappye oor die volgende tydperk kontantvloeiprobleme sal hê. Ten einde die grootte van die hoek te meet waar die maatskappy die gevaarsone binne beweeg is 365 genoteerde industriële maatskappye se data bestudeer. Die netto wins na belasting en die kontantvloei uit bedryfsaktiwiteite is beide as 'n indeks uitgedruk, laasgenoemde relatief tot eersgenoemde. Die verskil tussen die twee indeks-reekse is bereken, naamlik die indeks-verskil. Die studie is slegs gefokus op maatskappye met 'n indeks-verskil waar die kontantvloei uit bedryfsaktiwitete kleiner is as die netto wins na belasting. 'n Indeks-verskil van -2 is geïdentifiseer as die moontlike gevaarsone. Ten einde hierdie syfer te steun is die maatskappye wat ten tye van die navorsing steeds genoteer is en 'n indeks-verskil van -2 of groter negatief het, individueel ondersoek om die rede vir die indeks-verskil vas te stel. Items wat op 'n ander plek in die kontantvloeistaat as in die bedryfsaktiwiteite hanteer word, kan nie in ag geneem word in die berekening van die indeks-verskil nie, aangesien dit 'n permanente afwyking tussen die netto wins na belasting en kontant uit bedryfsaktiwiteite sal veroorsaak. Maatskappye wat dus bloot as gevolg van sodanige items 'n groot negatiewe indeks-verskil het, val nie in die gevaarsone nie. 33 maatskappye is geïdentifiseer met 'n indeks-verskilvan -2 of groter negatief. Daar is gefokus op die dertien maatskappye wat nie verliese gely het nie en steeds ten tye van die afhandeling van die studie genoteer was. Ses van hierdie maatskappye is tydens die individuele ondersoek van die gevaarlys gehaal aangesien daar ander redes vir die groot indeks-verskil was as 'n toename in nie-kontant bedryfskapitaal. Dit laat dan sewe maatskappye wat deur dié studie aangedui word as om moontlik finansiële probleme op te tel binne die afsienbare toekoms. 'n Paar addisionele maatskappye is ondersoek, waarna 'n verdere ses op die gevaarlys geplaas is. Slegs die tyd sal leer of die betrokke maatskappye wel in 'n finansiële verknorsing beland. Indien wel, kan hierdie indeks-verskil bereken word en as 'n aanduiding gebruik word van die punt wanneer 'n maatskappy, in baie gevalle ten spyte van goeie groei in omset, maar dan ook juis as gevolg daarvan, nie genoeg kontant uit bedryfsaktiwiteite genereer om die groei in nie-kontant bedryfskapitaal te finansier nie. Tensy die maatskappy 'n houermaatskappy het wat bereid is om nog kontant te stort in die maatskappy, of tensy die maatskappy 'n suksesvolle regte-uitgifte kan maak, vind hy homself in die posisie dat hy nie die uitbreiding kan finansier nie en dat hy ook nie meer addisionele finansiering kan bekom nie.

Thesis (MBA)--Stellenbosch University, 2001.
ENGLISH ABSTRACT: Users of Cash Flow Statements expect the information provided as cash flow from operating and investing activities to serve as a possible indicator that the company is facing bankruptcy. Traditionally, companies disclose depreciation as an operating activity and replacement of fixed assets as an investing activity. Companies that direct cash payments toward dividend and future expansion without addressing replacement of fixed assets are creating an unrealistic picture of their operating and investing activities. Generally accepted accounting practices (GAAP) have limited its disclosure requirements and has not addressed the issue of separating the expansion of fixed assets from replacement. This mini-study project researches the impact of disclosing depreciation as an investing activity and the replacement of fixed assets as an operating activity. Based on the findings, it is recommended that GAAP make it a requirement that the replacement and expansion of fixed assets be disclosed separately. It is further recommended that either depreciation be disclosed as an investing activity, or that replacement of fixed assets be disclosed as an operating activity on the Cash Flow Statement. The methods of disclosure investigated in the study will lead to an improvement in the ability of the two activities to serve as possible early indicators of bankruptcy.
AFRIKAANSE OPSOMMING: Gebruikers van kontantvloeistate verwag dat die inligting wat verskaf word van die bedryfs- en investeringsaktiwiteite as 'n moontlike indikator van die ondergang van die onderneming moet kan dien. Waardevermindering word tradisioneel as 'n bedryfsaktiwiteit openbaar, terwyl die vervanging van vaste bates as 'n investeringsaktiwiteit openbaar word. Ondernemings wat direkte kontantbetalings as dividende en toekomstige uitbreiding openbaar sonder dat die vervanging van vaste bates aangespreek word, skep 'n onrealistiese beeld van hul bedryfs- en investeringsaktiwiteite. Algemeen aanvaarde rekeningkundige beginsels het die openbaarmakingsvereistes beperk en spreek nie die skeiding tussen uitbreiding van bates en die vervanging daarvan aan nie. Hierdie mini-werkstuk ondersoek die impak van die openbaarmaking van waardevermindering as 'n investeringsaktiwiteit en vervanging van vaste bates as 'n bedryfsaktiwiteit. Gebaseer op die bevindinge word daar aanbeveel dat die algemeen aanvaarde rekeningkundige beginsels dit 'n vereiste maak dat die vervanging en uitbreiding van vaste bates apart openbaar word. Verder word aanbeveel dat waardevermindering as 'n investeringsaktiwiteit of vervanging van vaste bates as 'n bedryfsaktiwiteit in die kontantvloeistaat openbaar word.

The goal of this project is to review the literature on how to buy an existing business and to synthesize the material into a written instructional manual that a regular individual or aspiring entrepreneur can use in understanding the process necessary to buy an existing small business.

Thesis (MBA (Business Management))--University of Stellenbosch, 2010.
ENGLISH ABSTRACT: Despite growth being the target of all business operations, there is a concrete limit to growth. The concept of a sustainable cash flow growth rate is an important consideration, since it alerts management to cash flow shortfalls caused by a too-high growth rate. The company Homechoice Holdings Limited was chosen as the subject of this research report as it exhibited unusually high revenue growth, linked to a high share price and a subsequent cash shortfall. The tool of a sustainable growth rate model was employed to investigate whether the shortfall in cash could have been averted if the cash flow sustainable growth rate (CFSGR) had been adhered to. A selection of existing sustainable growth rate models is presented and their different emphases are discussed. This is followed by the development of a sustainable growth rate formula, which is applied to five general cases. In case 1, there is a dividend, depreciation, fixed expenses as well as a change in the working capital cycle (WCC). In case 2, depreciation, fixed expenses and a change in WCC are evident, but the dividend is zero. In case 3, depreciation and a change in WCC are evident, but dividend and fixed expenses are zero. In case 4, all items are zero excepting a change in WCC. In the final case, 5, all items are zero. The published financials of the years 1996-2000 are analysed in detail and the market reaction (share price and press reaction) is portrayed. Lastly the actual developments of the profits and the share price are compared with a hypothetical case in which the previously defined CFSGR would have been used. In conclusion the issue of the CFSGR is contextualised with other information which contributed to the decline of this company.
AFRIKAANSE OPSOMMING: Hoewel groei die teiken van alle sakebedrywighede is, het groei ’n konkrete limiet. Die konsep van ’n volhoubare kontantvloei-groeikoers is ’n belangrike oorweging omdat dit bestuur waarsku wanneer daar kontantvloeitekorte is wat veroorsaak word deur ’n groeikoers wat te hoog is. Die maatskappy Homechoice Holdings Beperk is as onderwerp van hierdie navorsingsverslag gekies as gevolg van sy buitengewoon hoë inkomstegroei wat aan ’n hoë aandeelprys en ’n gevolglike kontanttekort gekoppel is. ’n Volhoubare groeikoersmodel word as hulpmiddel gebruik om ondersoek in te stel of die kontanttekort verhoed kon word indien die maatskappy die kontantvloei volhoubare groeikoers (CFSGR) gebruik het. ’n Seleksie van bestaande volhoubare groeikoersmodelle word aangebied en die verskillende elemente wat hulle beklemtoon word bespreek. Dit word gevolg deur die ontwikkeling van ’n volhoubare groeikoersformule wat op vyf algemene gevalle toegepas word. In geval 1 is daar ’n dividend, depresiasie, vaste koste sowel as ’n verandering in die bedryfskapitaalsiklus. In geval 2 is depresiasie, vaste koste en ’n verandering in die bedryfskapitaalsiklus voor die hand liggend, maar die dividend is nul. In geval 3 is depresiasie en ’n verandering in die bedryfskapitaalsiklus voor die hand liggend, maar dividende en vaste koste is nul. In geval 4 is alle items nul buiten ’n verandering in die bedryfskapitaalsiklus. Laastens, in geval 5, is alle items nul. Die gepubliseerde finansiële jaarstate van 1996 tot 2000 word breedvoerig ontleed en die markreaksie (aandeleprys en mediareaksie) word aangetoon. Laastens word die werklike ontwikkeling van die winste en die aandeleprys met ’n hipotetiese geval vergelyk waarin die CFSGR, wat vroeër gedefinieer is, gebruik is. Die kwessie van die CFSGR word ook in ’n konteks geplaas saam met ander inligting wat tot die agteruitgang van hierdie maatskappy bygedra het.

This study is aimed at investigating the effect of mergers and acquisitions on the share prices and dividends involving South African companies in the food and beverage industry. A sample of 79 mergers from 1999 to 2005 was used. The data was analysed using the event study methodology and descriptive statistics. In addition, the paired t-test was also conducted to test the significance of the results. The results were presented using graphs, tables and charts. The results showed that target companies obtained negative abnormal returns during the announcement of mergers while acquiring companies on the other hand received positive abnormal returns. The results imply that it can no longer be generalized that target companies always win and acquiring companies lose during the merger activity. On the other hand, the dividends for target companies increased significantly after the merger, while the dividends for acquiring companies remained insignificantly negative after the merger.
Graduate School of Business Leadership
MBL

Thesis (PhD)--University of Stellenbosch, 2005.
ENGLISH ABSTRACT: Several mixed industry prediction models about failure have been reasonably successful in differentiating between successful companies and those that have failed. The challenge, however, is to venture into the grey area in between and to identify companies, which are financially unstable, at an early stage. Early identification enables management to intervene timeously in an attempt to prevent failure. Failure is defined as either liquidation, delisting, suspension of listing or a substantial change in structure. The grey area focused on in this study is overtrading. Overtrading is triggered by the company growing at too high a rate relative to its specific structure. Cash is necessary to fund expansion, whether for an increase in inventories, credit sales or new non-current assets. If the company does not generate enough cash to fund this expansion, it has to be financed through external sources. The longer the period of growth and the higher the growth rate, the more the cash requirements. From the theoretical model underlying overtrading, it was found that: • the higher the growth in sales, • the smaller the profit margin, and • the higher the net current assets in proportion to total assets, the lower the cash flow from operating activities before dividends were paid (CFO). Any company ought to generate enough cash from its daily activities in order to maintain the existing level of business, to repay loans, to replace assets and to pay dividends. If the internal generation of cash is insufficient to finance these activities, existing cash resources will be consumed, unproductive non-current assets will be sold and possibly also some of the productive non-current assets. The outcome for such a company is a business combination or liquidation. Due to the fact that cash plays such a big role in failure, cash flow variables constitute the majority of the independent variables used in the development of the failure prediction models. The overtrading ratio was developed as a measurement tool to quantify overtrading. As long as the company generates a positive CFO, it is not so much at risk as a company that does not succeed in generating a positive CFO. Therefore, a negative CFO for a three-year period was decided on as the norm for identifying possible financial difficulty. A company is involved in overtrading if the sum of CFO for three years less the sum of the adjusted profit for the three years, divided by the absolute value of the sum of the adjusted profit for the three years equals -1 or smaller in the case of a company with a cumulative profit for the three years; and smaller than nought in the case of a company with a cumulative loss for the three years. South African industrial companies listed for at least three years during the period 1974 to 2003, were identified. From a total of 6 662 cumulative three-year periods, 944 overtrading years were identified. Failure occurred in 212 out of 526 companies involved in overtrading between January 1974 and August 1989. 120 out of 199 companies involved in overtrading between September 1989 and November 1995 failed, while 90 out of 127 companies involved in overtrading, failed between December 1995 and June 2000. By June 2005 it was already evident that 49 out of 92 companies involved in overtrading between July 2000 and December 2003, had already failed. Companies involved in overtrading, may survive artificially for lengthy periods with the support of providers of capital. It can therefore be expected that failure prediction models will not achieve a better accuracy rate than achieved by probabilities. Six failure prediction models utilising classification tree algorithms were developed. Using data from two periods, two different models were developed; one for growth and recession phases of the economy, the other without distinction between economic phases. The first period was September 1989 to June 2000, the other December 1995 to June 2000. June 2000 was chosen as the cut-off, since a period of five years after an overtrading year was necessary to follow-up whether the company had failed. Each universe was split in two – the learning sample, more or less 60%, and the test sample, more or less 40%. The models were developed from the learning sample and the test sample was used as substantiation of the results of the developed model. The total classification accuracy of the three best models, one for the growth-phase, one for the recession-phase and one mixed economy model, is respectively 72,99%, 96,67% and 80,26% and the classification accuracy for the failed companies 75,29%, 100% and 85,19% respectively. The total prediction accuracy of the three models is respectively 69,23%, 80,95% and 72,55%, and that of the failed companies 73,68%, 86,67% and 83,33%. The accuracy of all the models was found to be higher than what the accuracy would have been if all the companies involved in overtrading were merely classified as having failed. From the results of the different tests, it seems that Ver3, the growth in sales from year 1 to year 3, is probably the most important independent variable in the classification between failed and non-failed overtrading years. This corroborates the theory underlying overtrading that indicates that a high sales growth puts a company at risk for cash flow problems. Companies where the cash flow problems develop because of an increase in current assets will be intercepted by the overtrading ratio. Companies where cash flow problems develop due to replacement of non-current assets, will not necessarily be intercepted by the overtrading ratio as CFO that is used in the overtrading ratio does not allow for replacement of non-current assets. It is therefore necessary to adjust CFO to a free cash flow CFO. Depreciation is used as an alternative for replacement investment since disclosure of replacement investment is not required. Depreciation is theoretically the fraction of the value of an asset lost during the year; this value needs to be replaced. By subtracting the depreciation for the year from CFO, this amount will be more representative of the cash position of the company after considering all the normal transactions in order to sustain the business. After all the adjustments for a free cash flow, six models were developed for the different periods and economic phases. The accuracy of these models were better than what the accuracy would have been if overtrading years were merely classified as failed. Implementing these models would therefore improve specificity. From the tests performed, Ver3 and KVB3/TB (the cumulative CFO for the three years over total assets) seem to be the most important independent variables in the classification between failed and non-failed when considering free cash flow. This is informative as KVB3:TB represents a fictional amount, as if the company spent an amount equal to depreciation on replacement investment.
AFRIKAANSE OPSOMMING: Heelwat gemengde industrie-mislukkingvoorspellingsmodelle was al redelik suksesvol in die onderskeid tussen mislukte en suksesvolle maatskappye. Die uitdaging is egter om die grys area tussen dié uiterstes te betree en ’n maatskappy wat finansieel onstabiel is, vroegtydig te identifiseer. Vroegtydige identifikasie stel die bestuur in staat om betyds in te gryp en mislukking te voorkom. Mislukking word as likwidasie, òf denotering, òf opskorting van notering, òf ’n wesenlike struktuurverandering, gedefinieer. Die grys area waarop die fokus in hierdie studie val, is oorbedryf. Oorbedryf word veroorsaak deurdat die maatskappy teen ’n te hoë koers relatief tot sy spesifieke struktuur groei. Kontant is nodig om uitbreiding, hetsy ’n toename in voorraad, kredietverkope of nuwe nie-bedryfsbates, te finansier. Indien die besigheid nie genoeg kontant genereer om hierdie uitbreiding te finansier nie, moet dit vanuit eksterne bronne gefinansier word. Hoe langer die tydperk van groei voortduur en hoe hoër die groeikoers is, hoe meer is die kontantbehoeftes. Uit die teoretiese model wat onderliggend is aan oorbedryf, is bevind dat: • hoe hoër die groei in verkope, • hoe kleiner die winspersentasie, en • hoe hoër die bedryfskapitaal in verhouding tot die totale bates; hoe laer is die kontantvloei uit bedryfsaktiwiteite voor dividende betaal (KVB). Enige besigheid behoort genoeg kontant uit dag-tot-dag-aktiwiteite te genereer ten einde die bestaande vlak van besigheid vol te hou, lenings terug te betaal, bates te vervang en dividende te betaal. Indien die interne kontantgenerering onvoldoende is om hierdie aktiwiteite te finansier, sal bestaande kontantbronne uitgewis word, onproduktiewe nie-bedryfsbates sal verkoop word en moontlik ook van die produktiewe nie-bedryfsbates. Die uiteinde vir so ’n maatskappy is ’n besigheidsoorname of ’n likwidasie. Aangesien kontantvloei so ’n groot rol in mislukking speel, is kontantvloeiveranderlikes die meerderheid van die onafhanklike veranderlikes wat in die ontwikkeling van die mislukkingvoorspellingsmodelle gebruik is. Die oorbedryfsratio is as ’n maatstaf ontwikkel om oorbedryf te meet. Solank as wat ’n maatskappy ’n positiewe KVB genereer, is hy nie so riskant soos ’n maatskappy wat nie daarin kan slaag om positiewe kontant te genereer nie. Daarom is ’n negatiewe kumulatiewe KVB vir ’n drie-jaar-tydperk as die norm gestel om moontlike finansiële nood te identifiseer. ’n Maatskappy is besig met oorbedryf indien die som van die KVB vir drie jaar minus die som van die aangepaste wins vir die drie jaar, gedeel deur die absolute waarde van die som van die aangepaste wins vir die drie jaar, gelyk aan of kleiner as -1 is, in die geval van ’n maatskappy wat ’n kumulatiewe wins vir die drie jaar het; en kleiner as nul in die geval van ’n maatskappy wat ’n kumulatiewe verlies vir die drie jaar het. Alle Suid-Afrikaanse genoteerde industriële maatskappye wat vir ten minste drie jaar gedurende die tydperk 1974 tot 2003 genoteer was, is geïdentifiseer. Uit ’n totaal van 6 662 kumulatiewe drie-jaar-tydperke was daar 944 oorbedryfsjare. Vanaf Januarie 1974 tot Augustus 1989 was daar 526 oorbedryfsjare, waarvan 212 misluk het. Vanaf September 1989 tot November 1995 was daar 199 oorbedryfsjare, waarvan 120 misluk het en vanaf Desember 1995 tot Junie 2000 het 90 van 127 oorbedryfsjare misluk. Teen Junie 2005 was dit reeds bekend dat 49 van die 92 oorbedryfsjare tussen Julie 2000 en Desember 2003 misluk het. Oorbedryfsmaatskappye bly soms vir uitgebreide tydperke kunsmatig voortbestaan, indien die verskaffers van kapitaal hulle dra. Die verwagting was dus dat mislukkingvoorspellingsmodelle nie ’n beter akkuraatheid sou behaal as wat waarskynlikhede sou bepaal nie. Ses mislukkingvoorspellingsmodelle is met behulp van die klassifikasieboomalgoritme ontwikkel. Een model elk vir die groeifase en die resessie-fase van die ekonomie en een model sonder onderskeid van die ekonomiese fase is met die gebruikmaking van twee tydperke se data ontwikkel. Die eerste tydperk was September 1989 tot Junie 2000 en die ander Desember 1995 tot Junie 2000. Junie 2000 is as die afsnypunt gebruik aangesien ’n vyf-jaaropvolgtydperk na ’n oorbedryfsjaar nodig is om vas te stel of die maatskappy misluk het. Elke universum is in twee verdeel – die leersteekproef, ongeveer 60%, en die toetssteekproef, ongeveer 40%. Die modelle is uit die leersteekproef afgelei en die toetssteekproef is gebruik as bevestiging van die resultate van die afgeleide model. Die totale klassifikasie-akkuraatheid van die drie beste modelle, een vir die groeifase, een vir die resessie-fase en een gemengde ekonomiemodel, is onderskeidelik 72,99%, 96,67% en 80,26% en dié vir die mislukte maatskappye 75,29%, 100% en 85,19%. Die totale voorspellingsakkuraatheid van die drie modelle is onderskeidelik 69,23%, 80,95% en 72,55% en dié van die mislukte maatskappye 73,68%, 86,67% en 83,33%. Al die modelle se akkuraatheid is meer as wat die akkuraatheid sou wees indien al die oorbedryfsjare bloot as misluk geklassifiseer sou wees. Uit die resultate van verskeie toetse blyk dit dat Ver3, die groei in verkope vanaf jaar 1 tot jaar 3, waarskynlik die belangrikste onafhanklike veranderlike in die onderskeid tussen mislukte en nie-mislukte oorbedryfsjare is. Dit ondersteun die teorie wat onderliggend is aan oorbedryf, wat aandui dat ’n hoë groei in verkope ’n maatskappy op risiko plaas vir kontantvloeiprobleme. Maatskappye waar die kontantvloeiprobleme vanweë ’n uitbreiding in bedryfskapitaal ontstaan, word deur die oorbedryfsratio onderskep. Die maatskappye waar die kontantvloeiprobleme eerder uit die vervanging van nie-bedryfsbates sal voortvloei, sal nie noodwendig deur die oorbedryfsratio ondervang word nie, aangesien die KVB wat in die oorbedryfsratio gebruik word, nie voorsiening maak vir vervangende investering nie. Dit is daarom nodig om KVB tot ’n vrye kontantvloei-KVB aan te pas. Waardevermindering word as ’n alternatief vir vervangende investering gebruik, aangesien vervangende investering nie ’n verpligte openbaarmakingsvereiste is nie. Waardevermindering is teoreties dié deel van die bate wat gedurende die jaar opgebruik is en wat vervang behoort te word. Deur dus die jaarlikse waardevermindering van KVB af te trek, is hierdie syfer meer verteenwoordigend van die maatskappy se kontantposisie nadat alle normale transaksies om die besigheid in stand te hou, in ag geneem is. Na die aanpassings vir vrye kontantvloei is weer ses modelle uit die verskillende tydperke en vir die verskillende ekonomiese fases ontwikkel. Al die modelle se akkuraatheid is beter as wat die akkuraatheid sou wees indien al die oorbedryfsjare bloot as misluk geklassifiseer sou wees. Ver3 en KVB3:TB (die kumulatiewe KVB vir die drie jaar tot die totale bates) blyk uit die toetse die belangrikste onafhanklike veranderlikes te wees in die onderskeid tussen misluk en nie-misluk wanneer vrye kontantvloei in ag geneem word. Dit is insiggewend aangesien KVB3:TB ’n fiktiewe syfer verteenwoordig, sou die maatskappy ’n bedrag wat gelyk is aan waardevermindering, aan vervangende investering bestee het.

Thesis (MBA (Business Management))--Stellenbosch University, 2008.
ENGLISH ABSTRACT: Successful merger and acquisitions (M & A) from a financial perspective increases shareholder value. This paper examines the effect of corporate mergers and acquisitions (M & A) on shareholder value. A discussion on shareholder value follows with reasons why companies choose M & A as a growth strategy. The type of M & A strategy affects the value it creates. A literature review of M & A activity during the five periods in the twentieth century, referred to as merger waves, provides an understanding of the conditions which precipitate M & A activity. However, failure of companies that engage in M & A activity has not resulted in a decline in the popularity of M & A. This study identifies and subsequently analyses data (profitability ratios) on 34 upstream oil and gas companies that have engaged in M & A activity. Profitability ratios indicate the financial performance of a company and ultimately shareholder value. In order to obtain the best possible insights into the behaviour of the identified variables and their impact on shareholder value, the specific variables are empirically tested over different time periods through the application of two statistical tests performed on the data. The empirical analysis is based on a total of 324 observations gathered by Evaluate Energy for global oil and gas companies and covers the period 1995 to 2005. The results of the different testing methods, although subject to certain limitations, give reason to believe that the M & A leads to an erosion of shareholder value. Hence the appropriate reasons for embarking on an M & A strategy and the comprehensive pre-acquisition evaluation thereof, is tantamount to M & A success.
AFRIKAANSE OPSOMMING: Vanuit ‘n finansiële oogpunt kan suksesvolle samesmeltings en aanskaffings (S & A) aandeelhouers-waarde verhoog en hierdie werkstuk ontleed die effek wat korporatiewe S & A’s op aandeelhouers-waarde het. ‘n Bespreking oor aandeelhouers-waarde volg en verskaf redes waarom maatskappye S & A’s as ‘n groeistrategie verkies en hoe die tipe S & A strategie wat gevolg word die waarde wat dit skep affekteer. Gedurende die 20ste eeu was daar vyf tydperke waarin S & A aktiwiteite hoog was, die sogenaamde “merger waves” en ‘n ontleding van literatuur gedurende hierdie tydperke verskaf ‘n begrip van die omstandighede wat aanleiding gee tot S & A aktiwiteite. Alhoewel sommige S & A’s onsuksesvol is, bly dit ‘n populêre keuse by maatskappye om aandeelhouers-waarde te probeer verhoog. Hierdie studie identifiseer en analiseer data (winsgewendheids-verhoudings) van 34 “upstream” olie- en gasmaatskappye wat een of ander tyd in ‘n S & A betrokke was. Winsgewendheids-verhoudings dui op die finansiële prestasie van maatskappye en uiteindelik op aandeelhouers-waarde. Ten einde die beste insae in die optrede van die geidentifiseerde veranderlikes en hul impak op aandeelhouers-waarde te kry, is die spesifieke veranderlikes numeries getoets oor verskillende tydperke deur middel van twee statistiese modelle. Die numeriese analises is gebaseer op 324 waarnemings deur Evaluate Energy op internasionale olie- en gasmaatskappye tussen 1995 en 2005. Die uitslae van die verskillende metodes van toets, ingesluit sekere beperkings, dui daarop dat S & A’s oor die algemeen lei tot ‘n vermindering in aandeelhouers-waarde en daarom is dit van kardinale belang om ‘n beproefde S & A strategie te ontwikkel voordat ‘n S & A aangepak word.

Thesis (MBA)--Stellenbosch University, 2008.
ENGLISH ABSTRACT: Repurchasing of shares by South African companies were legalised on 1 July 1999. This introduced an alternative to dividends for distributing cash to shareholders. Although dividends and share repurchases realise the same value in a perfect efficient market, the inefficiencies of the South African stock market require managers to carefully evaluate factors like taxation and stock price valuation when selecting appropriate distribution methods. This research report aims to update shareholder distribution trends for industrial JSE listed companies over the past 10 years in order to determine the impact of share repurchases on dividend payouts. Furthermore, this research report examines the factors that may have had an impact on shareholder distribution choices in order to provide some guidelines for choosing appropriate distribution methods. An initial analysis of SENS share repurchase announcements revealed that 121 JSE listed companies repurchased about R50 billion worth of shares up to 30 June 2007. The bulk of the shares, 65% by value, were repurchased on the open market, while 35% was repurchased through specific fixed price offers. However, a comparison of accurate share repurchase data obtained from a sample of company annual reports, indicate that repurchase announcements understate actual repurchases by more than 20% on average. Further analysis of distribution trends were therefore based on actual repurchase data published in annual reports rather than SENS announcements. After the legalisation of share repurchases in South Africa, a decline in dividend paying companies was expected similar to that experienced by the United States since the 80's. However, a detailed analysis of 132 industrial listed companies indicated that the proportion of dividend paying companies increased from a level of 50% to almost 75% since the introduction of share repurchases. On the other hand, the proportion of companies repurchasing shares initially rose to over 25%, but then declined to below 20% by 2007. Ordinary dividends are the dominant shareholder distribution choice with 64% of companies opting for this method. Open market share repurchases have been well adopted with 17% of companies using this method, while only 5% and 4% of companies using special dividends or specific repurchases respectively. Dividends paid out of share premium (capital distributions) have also emerged as a favourite over recent years with almost 20% of companies using this shareholder distribution method. Current tax legislation do not provide all the advantages usually enjoyed by share repurchases internationally and have largely prevented dividends from being substituted by share repurchases. The decline in share repurchases up to 2007 also indicates that share repurchases become less effective as share prices increase to overvalued levels. While tax implications and stock price valuation remain the dominant determinants of shareholder distribution choice, this study shows that shareholder diversity, dividend preferences, size of distribution, and BEE requirements also have significant influences on the choice of distribution method in the South African context.
AFRIKAANSE OPSOMMING: Die terugkoop van aandele deur Suid-Afrikaanse maatskappye is wettig sedert 1 Julie 1999. Dit het 'n alternatief tot dividende in werking gestel om kontant aan aandeelhouers uit te keer. Alhoewel dividende en aandele-terugkoop dieselfde waarde in 'n perfekte doeltreffende mark realiseer, vereis die tekortkominge van die Suid-Afrikaanse aandelemark dat bestuurders faktore soos belasting en aandeelpryswaardasie versigtig moet oorweeg tydens die keuse van geskikte uitkeringsmetodes. Die doelwit van hierdie navorsingsverslag is om die tendense van uitkerings aan aandeelhouers te hersien vir industriele JSE-genoteerde maatskappye oor die laaste 10 jaar om sodoende die effek van aandele-terugkope op dividenduitbetalings te bepaal. Verder ondersoek hierdie navorsingsverslag ook die faktore wat moonlik 'n invloed op aandeelhouers-uitkeringskeuses gehad het, om sodoende riglyne vir die keuse van geskikte uitkeringsmetodes saam te stel. 'n Voorlopige analise van SENS-terugkoopaankondigings toon dat 121 JSE-genoteerde maatskappye ongeveer R50 miljard se aandele teruggekoop het tot en met 30 Junie 2007. Die grootste gedeelte van hierdie aandele, 65% se waarde, is op die ope mark teruggekoop terwyl 35% deur spesifieke vasteprys terugkope verkry is. 'n Vergelyking met terugkoopsyfers wat uit 'n steekproef van maatskappyjaarverslae geneem is, dui egter daarop dat aankondigings die ware terugkope met gemiddeld 20% onderskat. Verdere ontleding van aandeelhouers-uitkeringstendense word derhalwe gebaseer op syfers wat in jaarverslae gepubliseer is, eerder as SENS-aankondigings. Na die wettiging van aandele-terugkoop in Suid-Afrika, is verwag dat dividenduitbetalings sou daal soortgelyk aan dit wat in die Verenigde State ondervind is sedert die 80's. Die ondersoek van 132 genoteerde industriele maatskappye toon egter dat die persentasie van maatskappye wat dividende betaal van 50% tot bykans 75% toegeneem het sedert aandele-terugkoop 'n beskikbare opsie is. In teenstelling hiermee, het die persentasie maatskappye wat aandele terugkoop aanvanklik tot 25% gestyg, maar sedertdien afgeneem tot onder 20% teen 2007. Gewone dividende is die gewildste aandeelhouers-uitkeringsmetode met 64% van maatskappye wat van hierdie metode gebruik maak. Aandele-terugkope op die ope mark is goed verteenwoordig met 17% van maatskappye wat van hierdie metode gebruik gemaak het, terwyl slegs 5% en 4% van maatskappye onderskeidelik van spesiale dividende en spesifieke aandele-terugkope gebruik gemaak het. Dividende uit aandelepremie (kapitaaluitkerings) het ook na vore getree as 'n gunsteling keuse in die laaste paar jaar met bykans 20% van maatskappye wat hierdie uitkeringsmetode gebruik het. Huidige belastingswetgewing bied nie al die belastingvoordele aan aandele-terugkope wat normaalweg deur internasionale maatskappye benut word nie en het grotendeels verhoed dat dividende deur aandele-terugkoop vervang is. Die afname in aandeleterugkope tot en met 2007 is ook 'n aanduiding dat dit minder effektief raak soos wat aandeelpryse oor gewaardeerde vlakke styg. Terwyl belasting-oorwegings en aandeelpryswaardasies steeds die dominante drywers van aandeelhouersuitkeringskeuses bly, bevind hierdie studie dat faktore soos aandeelhouers se diversiteit, dividendvoorkeure, grootte van uitkerings, en vereistes van swart ekonomiese bemagtiging ook 'n noemenswaardige invloed op uitkeringskeuses binne die Suid-Afrikaanse konteks het.

The government of Ghana borrows from both domestic and foreign sources to finance the budget deficit. By the year 2013, the domestic debt was 55% of the public debt. Government domestic borrowing is competitive and can potentially crowd out the private corporate sector. Therefore, the specific research problem addressed in this study was whether the Ghanaian government's domestic debt (DEBT) caused financial crowding out (FCO) in Ghana. FCO theory is not conclusive and not proven specifically for Ghana, so the purpose of this research was to investigate its presence in Ghana. The neoclassical theory of FCO underpinned the research. The 2 research questions investigated FCO along the quantity and cost channels. The research examined the relationship between DEBT as the independent variable, the quantity of private sector credit (PSCREDIT), and the net interest margin (NIM) of banks as dependent variables. Covariates were macroeconomic and banking industry variables. The research population was the banking sector of the financial services industry. The research was correlational, and it used time series data from the Bank of Ghana and the World Bank. Data analysis used the autoregressive distributed lag method. The analysis returned a negative relationship between DEBT and PSCREDIT, and a positve relationship between NIM and DEBT. These results indicated the presence of FCO along both the quantity and cost channels. The research provides policymakers a means of quantifying the extent and effects of fiscal policies. The study may contribute to positive social change by promoting the revision of fiscal policies to favor the private corporate sector to invest, create jobs, and grow the Ghanaian economy.

Thesis (MBA (Business Management))--University of Stellenbosch, 2008.
ENGLISH ABSTRACT: To date, there has been significant research completed on the topic of corporate financial distress. Two pioneering researchers in the field of predicting financial distress was Beaver in 1966 and Altman in 1968. More recent research, based on companies listed on the JSE has been that of Steyn-Bruwer and Hamman (2006). This project, based on the latter authors’ work, has been formulated with one main research objective and two subordinate research objectives. The main research objective is to prove that different modelling techniques provide better prediction accuracies than others. The two subordinate research objectives are firstly to prove that there is a difference in the overall predictive accuracy if the data (provided by Steyn-Bruwer and Hamman) is subdivided according to “year before failure” and not according to economic period and secondly to prove that more optimised, independent variables would provide a better overall predictive accuracy. This research report summarises several significant papers on the topic; and draws the conclusion that research on financial distress is fragmented with very little consensus on any of the major definitions, assumptions and findings. In order to contextualise these differences; this research report defines and discusses corporate financial distress and considers the major issues associated with the field of research. An interesting observation from the literature survey was the fact that existing literature does not readily take consideration of the number of Type I and Type II errors made. As such, this research report introduces a novel concept (not seen in other research) called the “Normalised Cost of Failure” (NCF) which takes cognisance of the fact that a Type I error typically costs 20 to 38 times that of a Type II error. In order to satisfy the main research objective several different modelling techniques were selected based on their popularity in the literature surveyed. They are: Multiple Discriminant Analysis (MDA), Recursive Partitioning (RP), Logit Analysis (LA) and Neural Networks (NN). A summary of each of the different techniques is provided in Chapter 4 of this research report. The research by Steyn-Bruwer and Hamman forms the departure point for this research and their work is summarised in Chapter 5 of this report. Chapters 6, 7 and 8 use the data from Steyn-Bruwer and Hamman along with the above mentioned modelling techniques to verify the main and subordinate objectives. In terms of the main research objective, the results of these chapters show that the different analysis techniques definitely produce different predictive accuracies. Here, the MDA and RP techniques correctly predict the most “failed” companies; and consequently have the lowest NCF. This research report also shows that LA and NN provide the best overall predictive accuracy. In terms of the first subordinate research objective; this research shows that using the year before failure rather than the economic period as a subdivision provides superior predictive accuracy. With regard to the second subordinate research objective: there is no difference in the predictive accuracies if the independent variables are further optimised. These results were disappointing and consequently disprove the second subordinate objective that widening the number of input variables actually improves the predictive accuracy. In fact, the results indicate that the information contained in the independent variables seems to saturate after the most important (key predictor) independent variables have been included in the model. It is important to take cognisance of the fact that each predictive technique has its own strength and weakness. It is proposed by the author that the strengths and weaknesses of these predictive techniques be combined to provide a better overall predictive methodology.
AFRIKAANSE OPSOMMING: Heelwat betekenisvolle navorsing oor die onderwerp van maatskappye se finansiële verknorsing is tot op hede voltooi. Twee baanbreker-navorsers op die gebied van vooruitskatting van finansiële verknorsing was Beaver in 1966 en Altman in 1968. Meer onlangse navorsing, gebaseer op maatskappye wat op die JSE genoteer is, was dié van Steyn-Bruwer en Hamman (2006). Hierdie navorsingsverslag, gebaseer op die voorgenoemde outeurs se werk, is geformuleer met een hoofnavorsingsdoelwit en twee ondergeskikte navorsingsdoelwitte. Die hoofnavorsingsdoelwit is om te bewys dat verskillende modelleringstegnieke beter voorspellingsakkuraatheid as andere het. Die twee ondergeskikte navorsingsdoelwitte is, eerstens, dat daar ʼn verskil is in die oorhoofse voorspellingsakkuraatheid as die data (verskaf deur Steyn-Bruwer en Hamman) onderverdeel word volgens die “jaar voor mislukking” eerder as volgens die ekonomiese tydperk; en tweedens, om te bewys dat meer geoptimiseerde, onafhanklike veranderlikes kan lei tot ʼn beter oorhoofse voorspellingsakkuraatheid. Ten einde hierdie verskille te konseptualiseer, het hierdie navorsingsverslag finansiële mislukkings van maatskappye bespreek en gedefinieer en aandag geskenk aan die belangrikste aspekte geassosieer met die navorsingsveld. ʼn Interessante waarneming uit die literatuurstudie was die feit dat die huidige literatuur selde indien enige, oorweging skenk aan die aantal Tipe I- en Tipe II-foute wat gemaak word. As sulks het hierdie navorsingsprojek ʼn nuwe begrip (nog nie in ander navorsing gesien nie) ontwikkel, wat beskryf word as die “Genormaliseerde Kostefaktor”; wat die feit dat ʼn Tipe I-fout tipies 20 tot 38 maal die koste van ʼn Tipe II-fout beloop, in ag neem. Ten einde te voldoen aan die hoofnavorsingsdoelwit is verskillende modelleringstegnieke wat op grond van hul gewildheid in die literatuur voorgekom het, gekies. Hulle is: Meervoudige Diskriminantanalise (MDA), Herhalende Verdeling (RP), Logit-Analise (LA) en Neurale Netwerke (NN). ʼn Opsomming van elk van hierdie verskillende tegnieke word in Hoofstuk 4 van hierdie navorsingsverslag verskaf. Die navorsing wat deur Steyn-Bruwer en Hamman gedoen is, vorm die vertrekpunt van hierdie navorsing en hulle werk is gevolglik in Hoofstuk 5 van hierdie verslag opgesom. Hoofstukke 6, 7 en 8 gebruik die data van Steyn-Bruwer en Hamman tesame met die bovermelde modelleringstegnieke ten einde die hoof- en ondergeskikte doelwitte te bewys. In terme van die hoofnavorsingsdoelwit, het die resultate van hierdie hoofstukke getoon dat die verskillende analitiese tegnieke definitief verskillende voorspellingsakkuraatheid oplewer. Hier het die MDA- en RP-tegnieke die grootste aantal mislukte maatskappye korrek voorspel, en gevolglik die laagste Genormaliseerde Kostefaktor gehad. Die navorsingsverslag toon ook dat LA en NN die beste oorhoofse akkuraatheid van voorspelling het. In terme van die eerste ondergeskikte navorsingsprobleem het hierdie navorsing getoon dat, om die jaar voor mislukking te gebruik as onderverdeling, eerder as die ekonomiese tydperk, beter voorspellingsakkuraatheid het. Wat die tweede ondergeskikte navorsingsdoelwit betref, is daar bevind dat daar geen verskille in die voorspellingsakkuraatheid bestaan as die individuele veranderlikes verder geoptimaliseer word nie. Hierdie resultate was teleurstellend en het gevolglik die tweede ondergeskikte probleem, naamlik dat as die aantal inset-veranderlikes sou vergroot word, dit die vooruitskattingsakkuraatheid behoort te kan verhoog, verkeerd bewys. Tewens, die resultate het getoon dat die inligting soos vervat in die onafhanklike veranderlikes klaarblyklik versadiging bereik nadat die belangrikste (hoof-vooruitskatter) onafhanklike veranderlikes in die model opgeneem is. Dit is belangrik om kennis te neem van die feit dat elke vooruitskattingstegniek sy eie sterk en swak punte het. Die skrywer stel dus voor dat hierdie sterk- en swakpunte gekombineerd gebruik word om ʼn beter oorhoofse vooruitskattingsmetodologie daar te stel.

This project will be focusing on the business problem of integrating information systems within a M & A organization, in this case to a SAP platform. SAP is the platform the parent company uses to run its corporate business functions.

In this dissertation, I examine two main topics in corporate finance: executive compensation and corporate investment. First, in the chapter titled “Import Penetration and Executive Compensation”, we investigate the impact of import penetration on executive compensation. We find that import penetration reduces executives’ total compensation, stock grants, and opportunistic grant timing, suggesting that competition mitigates agency problems and the need for conventional alignment mechanisms. Furthermore, we show that import penetration increases option grants and option duration, thus incentivizing more innovation and risk-taking. Second, I study the relationship between entrenchment and corporate investment. In the chapter titled “Entrenchment, Managerial Shirking, and Investment”, I find that entrenchment reduces capital expenditures, R&D, and productivity, weakens a firm’s competitiveness in the product market, and diminishes firm value. These findings are consistent with the shirking hypothesis that entrenchment enables managers to evade the responsibilities of overseeing investment projects.

This literature review analyzes the global phenomenon of international project finance (PF) as both a management and finance instrument, allowing practitioners to realize large scale infrastructure projects in high risk contexts. After describing the characteristics of PF, its historical origins and its unique benefits for empirical inquiry, I summarize the findings of academic research from an interdisciplinary perspective. Based on this integration of Finance, Management and International Business research, I discuss the theoretical implications for each field that emanate from PF. Finally, I identify possibilities for future research and propose a more balanced, interdisciplinary academic treatment of PF.

Stakeholders are increasingly insistent that companies increase firm value. The problem is that stakeholders of financial services firms are unable to accurately determine firm value. The purpose of this correlational study was to examine the accuracy of 4 valuation models in predicting the market value of equity of commercial finance companies. Study participating companies were 8 listed U.S. or Canadian commercial finance companies. The theoretical constructs of the study included the accuracy of valuation models, modern portfolio theory, and the correlation of book value of equity to market value of equity. Financial information on participating companies obtained from public filings were input data in 4 valuation models. Multiple regression analysis of valuation model results and book value of equity (the predictor variables) were used to determine the accuracy of the models in predicting the market value of equity (response variable). The findings of the study showed that all 4 valuation models in combination with the book value of equity were statistically significant predictors of the market value of equity of the participating companies at the p < .05 level. However, the dividend discount model (DDM) and residual income model (RIM) were statistically more accurate without the combination of book value of equity (p = .000 and p = .000, respectively) than the discounted cash flow and risk-adjusted discounted cash flow valuation models (p = .371 and p = .904, respectively). The results of this study contribute to positive social change by providing business leaders an ability to measure the effectiveness of their actions in creating firm value. Corporate social responsibility activities correlate to value creation for firms that engage in promoting employee welfare and other stakeholder welfare.

Research Summary: This paper argues for, and contributes to, a stronger integration of research on finance and international business/global strategy. We perform bibliometric analysis of journal publications between 2010 and 2016 and show that papers published in the two domains relate to very different underlying literatures which, so far, have had a limited overlap. We further argue based on a qualitative review of the literature that both fields offer substantial novel perspectives, models, and theories to each other that have the potential to enrich our theoretical understanding of relevant research questions in both domains. We map various pathways for further integration of international business/global strategy and finance fields and discuss different ways how to better connect the two fields and their different research perspectives and research methodologies. Managerial Summary: In this paper we, first, find that publications from the field of finance and from the area of international business/global strategy relate to very different literatures. Second, we show that both fields would indeed offer substantial and relevant novel perspectives to each other. Third, we develop various pathways for a more intense integration of both literatures. Given the relevance of both international business/global strategy and finance perspectives for business practice, we strongly believe that a more intense integration also bears substantial implications for managers. This is as much of the knowledge developed in international business/global strategy and finance did not fully transfer into the respective other field.

We compare acquisition activity, method of payment choice, and the long-run value implications of acquisitions by newly public single-class and dual-class US companies. Our results show that dual-class IPO firms make relatively more acquisitions in innovative industries and are less likely to pay with stock as compared to single-class IPO firms. We provide evidence that the reluctance of dual-class firms to pay with stock is not related to the insiders' cash-flow rights but it is significantly positively related to the insiders' voting rights and wedge between the insiders' voting rights and cash-flow rights. We also find that acquiring dual-class IPOs perform better in the long-run than acquiring single-class IPO firms, and the better performance is mainly due to acquisitions in innovative industries. The results suggest that insiders of dual-class IPOs try to retain control during subsequent M&A activities. The governance structure in such firms allows them to make investments in high risk projects that enhance shareholder value in the long-run. Next, we examine the acquisition performance of family and non-family firms in the S&P 500 universe. Using style-adjusted and market-adjusted buy-and-hold returns (BHAR) and controlling for firm and merger characteristics, we find that the post-merger performance of family firms is significantly better than that of non-family firms. In particular, the mean one-year style-adjusted buy-and hold abnormal return is around 18% higher for family acquirers than for non-family acquirers. Further, contrary to the argument that founding family members make value-destroying diversifying acquisitions to minimize the risk of their personal portfolio, we do not find that family firms lose value in diversifying acquisitions. This result is consistent with Stein's model (1997) showing that diversification helps to reduce the cost of capital of the firm.

This thesis consists of three chapters. The first chapter is sole-authored and is titled `Cross-border mergers and acquisitions amid political uncertainty.' The second chapter is coauthored work with Professor Jon Garfinkel and Jaewoo Kim and is titled `The interactive influence of external and internal governance on risk taking and outcomes: The importance of CEO career concerns.' The third chapter is coauthored work with Professor Erik Lie and Jaewoo Kim and is titled `Dividend stickiness, debt covenants, and earnings management.' First chapter examines the effects of political uncertainty surrounding national elections on cross-border mergers and acquisitions. I find that the volume of cross-border mergers and acquisitions between two countries declines before elections in the target country. Firms in industries that are more dependent on the quality of contract enforcement, labor, and government spending are less likely to be acquired during election years. In a cross-border merger deal announced during the target country's election year, acquirers tend to offer a lower bid premium, and the likelihood of an all-cash offer is significantly lower. The acquirer captures a greater fraction of merger gains relative to the target in such a deal. Overall, my findings suggest that political uncertainty importantly affects multiple aspects of cross-border mergers and acquisitions. Second chapter studies the effects of multi-layered governance on firm risk by focusing on the interaction of two types of career concerns. Two Delaware court decisions, the validation of poison pill defenses (the Unitrin decision) implemented by staggered boards (the Wallace decision), reduced takeover-related career concerns. CEO age influences the response of Delaware firms to these shocks. Older CEOs in newly insulated firms reduce risk, while their younger counterparts increase risk. Ex-post, the differential behavior among young Delaware CEOs appears to be rewarded with abnormally positive stock performance and better future career outcomes. We conclude that there is important variation in the effects of governance on firm (CEO) behavior, driven by multiple facets of career concerns. Third chapter examines dividend stickiness. Consistent with the notion that dividends are very sticky, Daniel, Denis, and Naveen (2008) report evidence that firms manage earnings upward when pre-managed earnings are expected to fall short of dividend payments. However, we find that this evidence is not robust when controlling for firms' tendency to manage earnings upward to avoid reporting earnings declines. We further report that the decision to cut dividends depends on whether reported earnings fall short of past dividends, but not on earnings management that eliminates a shortfall in pre-managed earnings relative to dividend payments. Overall, our evidence suggests that firms that face dividend constraints are more likely to cut dividends than to manage earnings to avoid dividend cuts.

Small, Medium and Micro Enterprises (SMMEs) make a significant contribution to the South African Economy. Regardless of size, these businesses have the ability to create employment, make a generous contribution to tax collections, uplift communities and serve as a beacon of hope for those trapped in the cycle of poverty and unemployment. However, SMMEs lack access to much-needed financial resources that are critical for their growth. Development Finance Institutions (DFIs) aim to bridge the gap between the SMME’s financial needs and the development of the respective SMME businesses, by providing funding to entrepreneurs with potentially viable businesses and ideas. Debt funding to these SMMEs are based on sound commercial lending principles that take various non-quantitative variables into account. The sustainability of SMMEs is a primary concern to all participants in the economy, as it is known that SMME failure rates are high Therefore, the primary objective of this study was to investigate the impact that the credit risk management practices of DFIs have on the sustainability of SMMEs, by examining a case study of a typical DFI. An electronic questionnaire survey was considered as an appropriate measurement method for this study. The targeted population of the study included SMMEs in the Eastern Cape that are Trust for Urban Housing (TUHF) clients and 23 SMMEs were identified as part of the study sampling frame. A total number of 14 questionnaires were returned out of the 23 targeted SMMEs - giving a response rate of 61%. The quantitative data was processed using the STATISTICA program, leading to appropriate descriptive statistical analyses. In order to better understand the impact of credit risk management practices on the sustainability of SMMEs, a hypothesis was formulated and linear regression analysis was used to establish the statistical significance of certain credit risk principles and sustainability characteristics. The results of the empirical study revealed that credit risk management practises do impact on the sustainability of SMMEs. Further, by testing the hypothesis, it was also revealed that certain sustainability variables are regarded as more important than others.

In this dissertation, I study corporate activities, and their predictive abilities of market returns. The first chapter examines the determinants of industry merger waves. We propose a continuous merger activity variable (MAV) as an alternative to discrete industry merger waves. We find that the ranking of MAV within a quarter is associated with strong patterns in before and after industry returns and operating performance. During 1985-2015, bucket 1 containing industries with lowest MAV rank earns alpha of 0.30% per month higher than bucket 12 containing industries with highest MAV rank. The second chapter examines the predictive ability of many corporate activities, including mergers and acquisitions, insider trading, share repurchases, etc. Using machine learning approaches, we find that an aggregate index of corporate activities has substantial predictive power of future market returns both in- and out-of-sample, and yields much greater economic gain for a mean-variance investor. We further find that the predictive ability of the corporate index stems from its information content about future cash flows and expected corporate investments and that the corporate index performs particularly well for stocks with greater information asymmetry. The third chapter examines the relationship between firm valuation and takeover activity, using the European debt crisis as a laboratory. The European debt crisis in mid-2011 caused a wide-spread redemption of money market mutual funds (MMFs) with high exposure to European borrowers. The shock to a group of MMFs induced a reduction in the volume of repurchase agreements (repos) that the funds were engaged in. The resulting decline in the amount of capital available to support equity positions (furnished as collateral by the repo counterparties) potentially lead to downward price pressure on these stocks. I find that the temporary shock in firm valuation triggers more opportunistic takeover bids as suggested by prior studies, but it does not increase the takeover success rate. Overall, my findings present a more complicated picture to the relationship between market valuation and takeover activities than suggested by prior studies.

This thesis focuses on distributed ledger technologies, commonly known as blockchain technologies. In this study, blockchain technology is seen as an innovation that will change how trade finance industry will function in the future. In general, trade finance industry is based on risk mitigation, and this thesis studies how the implementation of a trust-free blockchain technology will affect how this industry operates. The study aims at understanding the effect of blockchain technology being implemented into the trade finance industry. In general, blockchain technology affects both, trade finance operations and how trust formation between the trade partners. This study combines model of diffusion innovation by Rogers (2003) and trust categorization of Jøsang et al. (2005). These models formulate the theoretical framework for the research. The nature of this study is qualitative research, which utilizes abductive reasoning, and has both theoretical and empirical part. Theoretical part consists of three chapters, focusing on the basics of blockchain technology, trade finance industry and the concept of trust. Empirical part is based on documentary data and semi-structured interviews of blockchain and trade finance professionals. Results show that trade finance, which is based on risk mitigation of international trade is slowly progressive, manually handled and paper-based process which has not been able to grasp the potential of automation advances made in other financial sectors. Trust between trading partners has previously been based on context-dependent trust, but the there is a shift towards more context-independent trust that is based on algorithms and ratings. Blockchain technology is based on immutable ledger technology and thus possesses the capability to change how trade finance functions.

In this dissertation, I focus my research on some of the economically significant and current open problems in international finance, specifically the relationship between Credit Default Swaps (CDS) on sovereign debt, the importance of fundamental dyadic distances on the initiation and completion of cross-border mergers and acquisitions, and the impact of domestic and transnational terrorism on cross-border mergers and acquisitions. In the first essay, we study the relationship between sovereign debt ratings and the information contained in CDS spreads regarding the credit risk of the reference entity. Using data for 54 countries over a twelve-year period, we find that the variation in average sovereign ratings in a given year can be explained by average CDS spreads over the previous three years. In a horse race between CDS spreads and sovereign ratings, we find that CDS spread changes can predict sovereign events while rating changes cannot. In the second essay, we study how dyadic distance influences the initiation, completion, and duration of cross-border mergers and acquisitions. Using a sample of 173,616 cross-border deals announced between 1970 and 2016, we find evidence that cross-country cultural, institutional, geographical, religious, and language differences, all play a deciding role in the initiation of mergers and acquisitions. The completion of acquisitions is independent of cultural factors, but largely depends on differences in economy size, language, religion, and bureaucracy of the acquiring and target countries. Finally, the duration of deals is influenced by idiosyncratic factors only. In the third essay, we study whether incidents of domestic and transnational terrorism impact the propensity of firms to acquire cross-border firms. We adopt a theoretical model to show that high levels of terrorism in the target countries are associated with lower cross-border acquisition flows. Empirically, we exploit the exogenous variation induced by differences in genetic diversity, ethnic fractionalization, and religious fractionalization between acquirer and target countries. Our results show that an target from a country with lower terrorist incidents than the acquirer country are associated with more cross-border mergers and acquisitions.

This dissertation consists of two chapters that concern with the consumption cycle and corporate finance. The first chapter analyzes the role of durability in characterizing the consumption cycle. There is strong empirical evidence demonstrating that decreases in residential investments and durable expenditures are early indicators of economic downturns. Analogously, once the economy goes into recession, early increases in residential investments and durable expenditures signal economic recoveries. So far, little work has been done detailing the mechanisms explaining these important empirical stylized facts. In this article, I develop a general equilibrium asset pricing production model that includes durability and substitutability between perishable and durable service consumption. Results indicate that large shocks in the productivity of the capital accumulation process and a high elasticity of intertemporal substitution are both needed to create the correct timing of changes in durable expenditures and nondurable consumption characterized in the data. The study also uses this general equilibrium model as a framework to make predictions about the term structure of forward contracts settled on a national housing price index. Such work will create a foundation for further developing this important derivatives market.

The second chapter analyzes the link between debt maturity and the term spread. This chapter is co-authored with Pratish Anilkumar Patel. Evidence shows that a firm's debt maturity and term spread are intricately linked. Firms issue short term debt when the term spread is significantly positive and they increase maturity as the term spread decreases. The current literature explains this link with market frictions such as agency problems, asymmetric information, and liquidity risk. We explain the link between debt maturity and term spread using the trade-off theory of capital structure. When the term spread is small or even negative, transaction costs of debt rollover outweigh bankruptcy costs. Therefore, the firm optimally chooses to increase debt maturity. On the other hand, when the term spread is significantly positive, bankruptcy costs outweigh transaction costs of debt rollover. Therefore shorter debt maturity is optimal as it minimizes the chance of bankruptcy. In addition, we contribute to the current discussion in the literature concerning the speed of adjustments of capital structure, finding that firms are active in adjusting their capital structure. The model is consistent with a variety of stylized facts concerning debt maturity.

This thesis consists of three essays that attempt to provide novel empirical analyses of important problems in finance. The first essay deals with the returns of actively managed mutual funds; the second and third essays attempt to bring further understanding to ultra high-frequency market microstructure data. The thread that binds these chapters together---if any---is the use of latent structure models. The first chapter attempts to identify unobserved populations of managers, the second looks for hidden structure in order book shapes, and the third searches for connections between order book events. Evaluating the performance of actively managed equity mutual funds is among the most important topics in the field of finance. In the first chapter, I present a new assessment of the stock picking ability of actively managed funds that accounts for the occurrence of false positives, an issue that complicates traditional assessments. I find that while the data is consistent with a small group of alpha-generating funds, the composition of this population experiences significant annual turnover and is, therefore, difficult to identify in advance. Between 1975 and 2015, the returns to a fund selection strategy based on the classification method fail to generate alpha. The second chapter begins a study of high-frequency limit order book data. With a view towards exploring the information content of limit orders, as opposed to market orders, I propose a factor model of order book shape. I start by building a unique dataset of Nasdaq limit order books that tracks order activity at ultra high-frequency. Analyzing over 20,000 stock-days, I find that the limit order book comprises three common factors, which I characterize as level, slope, and curvature. By combining these factors alongside price increments in a vector autoregression, I demonstrate that the factors not only explain limit order book shape but also predict returns over one-minute time intervals. In agreement with the claim that high-frequency traders serve a role in increasing market efficiency, I find a negative correlation between predictability and high-frequency trade activity. In the third chapter, I explore a continuous-time, event-driven model of limit order book dynamics. It is the first analysis of its kind to examine the microstructure of a broad cross-section of markets, as well as the first to introduce a Bayesian framework for the study of mutually-exciting Poisson processes in order-driven microstructure models. The picture that emerges is that of a strongly self- and mutually-exciting process characterized by intensity ``spikes'' lasting mere fractions of a second. The largest of these spikes are expected to generate between 0.5 and 2.0 order book events--up to 120 times the number of expected events per second. In the typical order book, market orders demonstrate a significant influence on limit orders and cancellations, but the relationship is non-reciprocating: while limit orders and cancellations exhibit strong interactions with each other, they have no effect on the arrival of market orders. Over 99.5% of the markets examined are stable, and in every market examined, the network model significantly improves in-sample fit relative to a baseline Poisson model. I argue that this improvement is due almost entirely to the most active 20-25% of connections.