H.P. Wolmarans

Does Lintner's dividend model explain South African dividend payments?

It is generally accepted that the payment of dividends is the most important and most widely used instrument for the distribution of value to shareholders. Shareholders also prefer to receive regular dividends rather than irregular cash payments. A well‐known model that attempts to explain dividend policy is that of Lintner (1956). This study investigates whether Lintner’s model can be used to explain South African dividend payments and compares this model with another, less sophisticated, model, namely the “percentage model”. Lintner’s model does not have a very good fit, probably as a result of the small sample used. Nearly half of the 200 largest companies that are listed on the Johannesburg Securities Exchange were excluded from the study as they were not listed for a sufficiently long period. Other companies were excluded on the grounds of having maintained their dividends on the same level for at least two consecutive years.

Business simulations in financial management courses : are they valuable to learners?

Business simulations are increasingly used to facilitate knowledge transfer in management education. Although such simulations have already been widely applied in other disciplines, this method of facilitating learning has not yet been used much in financial education. This article reports on three studies that examine the value added by this experiential learning method in a financial management course, as perceived by students. The reasons for students’ experiencing this teaching method as positive are investigated. It would seem that financial education has much to gain from a wider application of business simulations.

Quality cost in tertiary education: Making internal failure cost visible

Student failure in tertiary education costs taxpayers and donors large sums each year. The cost of quality can be substantial, but it can also be a source of significant savings. This study attempts to provide a framework in terms of which these costs can be quantified through the application of the principles of quality costing in tertiary education. An emphasis on quality increases profitability by increasing student throughput and by decreasing the cost of the provision of services. Significant savings are possible if the educational system could achieve greater success by focusing on adding value to those students that are more likely to succeed. If quality costing is made visible in the South African tertiary education system, it could have a profound impact on the products (students) that are delivered to society.

Investment management education: Is there a gap between the perceptions of academics and of practitioners?

In recent years, investment management education has become increasingly relevant. As a result of this development, it is essential that various role players should be consulted to ensure that investment management is taught in line with practitioners’ requirements. The South African Qualifications Authority also specifies that educators and practitioners should collaborate to maintain relevance in all fields of education. The importance of various areas in investment management was investigated. This article compares the ranking of these areas in terms of their importance as perceived by academics and practitioners. The study being reported also aimed to determine whether gaps exist between the areas that academics regard to be important and the areas that practitioners regard as such. Areas that are generally regarded to be most important include asset allocation, fundamental analysis and the measurement of risk and return. Areas that are regarded to be least important include arts, antiques and other hard assets; rights and capitalisation issues; and real estate. Areas in need of research include the measurement of risk and return; asset allocation; derivatives; and global markets and instruments. The findings of this study could have a significant impact on the provision of relevant training for South African investment specialists.

Structural breaks in the parameter estimates of the determinants of capital structure: Some evidence from the JSE

Purpose - This paper aims to test the effects of financial reforms on the structural stability of the parameter estimates in the determinants of capital structure. Design/methodology/approach - A panel of 100 non-financial companies listed on the Johannesburg Stock Exchange is constructed, and a panel least squares estimation technique is used to test for lagged, current and leading structural breaks in the firm specific determinants of leverage. Findings - The results show that structural reforms have a significant role in influencing the empirical relationship between leverage and its determinants. Specifically, the lifting of international sanctions and stock market liberalisation have a significant impact on the stability of the profitability, growth and tax rate variables for the book and market values of the debt to equity ratio. Furthermore, when the total and short term debt ratios are considered, only stock market liberalisation appears to have a significant influence on the stability of the profitability parameter. Originality/value - This paper adds to the existing body of literature on capital structure by documenting the extent of structural breaks in the parameter estimates of the relationship between leverage and firm specific determinants of capital structure for listed non-financial firms in South Africa.

Does “dividend investing” have value for the South African investor?

A number of portfolio strategies have been proposed, based on the dividend yield of a small number of large companies. It has been suggested that, by following any one of these strategies, a return that is superior to that of the market can be obtained. In this paper, these portfolio strategies are tested for investors on the Johannesburg Stock Exchange. However, not only are strategies based on dividend yield scrutinized, but also comparable strategies based on earnings yield. The average return of various portfolios, selected in accordance with four methods of ranking, are compared. The major finding is that earnings yield is a better ranking method than the dividend yield method.

Postgraduate education in taxation by means of a flexible learning model : a new educational paradigm

The Internet is becoming increasingly important in our daily lives. So, too, is the ease of communication by means of television. The power of these two technological tools in education has been combined in so‐called ‘flexible learning’. This study investigates the experience of students in a master’s degree programme in taxation, which is presented by means of flexible learning. In general, students experience this mode of learning very positively and would advise others to enrol for the same course. They acknowledge that the benefits of flexible learning far exceed any possible drawbacks.

The impact of flexible corporate governance disclosures on value relevance. Empirical evidence from South Africa

Considering that the Johannesburg Stock Exchange (JSE) has enacted in its Listings Requirements, compliance of listed firms to International Financial Reporting Standards (IFRS) and King Code of Good Corporate Governance, this study aims to investigate the impact of internal corporate governance attributes on the value relevance of accounting information in South Africa.,The fixed effect generalised least squares regression is used for the period from 2002 to 2014. Proxies for internal corporate governance are the size of the board, leadership structure, board activity, staggered board, boardroom independence, presence of key committees and board gender diversity. Value relevance is measured using the adjusted R2 derived from a regression of stock price on earnings and equity book values by following Ohlson’s accounting-based valuation framework.,The findings suggest that the net asset value per share is value-relevant in South African listed firms and also when the boardroom is largely independent. The value of earnings per share (EPS) is more robust when corporate governance structures, such as separating the roles of chief executive officer and chairperson, proportion of board-independent board members and presence of board committees, are in place. This suggests that EPS favours agency and resource dependence theories.,The value relevance of accounting information in the South African financial market underscores the importance of requisite rules and supervision regarding financial reporting to allow asset owners and managers in the allocation of capital decisions. This study supports the view that corporate governance plays a key role in ensuring, amongst others, credible financial reporting. The outcome of this study could inform the JSE to enforce, even stricter, compliance with IFRS and corporate governance to improve the value relevance of financial information.,Significant corporate governance reforms around the world suggest that regulators and policy makers consider corporate governance as a pertinent tonic in ensuring, amongst others, credible financial reporting. The implications of the study might assure users of financial information of how compliance to corporate governance practices may influence the value of the firm. This paper provides empirical evidence in the South African context that EPS, unlike net asset value per share, is driven by corporate governance structures.,The period of this study is unique, because it covers a relatively stable economic period before the financial crisis, a challenging and unstable period of time when the financial crisis materialised, and the aftermath of the financial crisis. In addition, the examination period of the study also covers the two corporate governance reforms in South Africa, King II in 2002 and King III in 2009, as well as the new Companies Act No. 71 of 2008. These exogenous factors may influence the results.

Impact of financial liberalisation on capital structure: Evidence from the Johannesburg Securities Exchange

This study tested the impact of financial liberalisation on a panel of non financial firms listed on the Johannesburg Stock Exchange. Using fixed, random effects and instrumental variable models, it was found that the removal of international sanctions and stock market liberalisation have a significant negative impact on most measures firm leverage. Capital account liberalisation has a direct and significant impact on firm leverage and the impact of domestic financial sector liberalisation on capital structure is weak. Firms increase their debt maturity structure following stock market liberalisation. The effects of financial liberalisation are more pronounced on larger firms.