This study examines the prevalence of confirmatory hypothesis testing strategies among auditors and investigates factors that may affect the employment of such strategies. Two experiments were conducted. Experiment 1 examined the impact of source credibility of inherited hypotheses on auditors' hypothesis testing strategies. Source credibility was manipulated by varying the expertise and bias of the hypothesis source. Experiment 2 examined auditors' hypothesis testing activities when using information stored in memory. Practicing auditors were asked to review internal controls in the sales area of a hypothetical firm and to make an assessment of control risk. The results of both experiments were analyzed using ANOVA and MANOVA procedures. The results suggest that auditors do not employ confirmatory hypothesis testing strategies. Rather, auditors had a strong tendency to consider negative information to be more relevant than positive information when assessing control risk resulting in the confirmation of negative hypotheses and disconfirmation of positive hypotheses. This tendency persisted regardless of the credibility of the hypothesis source, the direction of the hypothesis, and whether or not the hypothesis was tested from information stored in memory. The overwhelming focus on negative information suggests that auditors employ a conservatism heuristic in evaluating internal control. This evidence may aid in the development of a model of auditor judgment in that the conservatism heuristic may be central to auditors' decision making processes and may affect the use of other heuristics.

Bibliography: leaves 154-161. / The FASB began work in the area of postretirement benefits other than pensions (hereafter OPEB) in the early 1980's. It was to be a long, involved process, culminating in the issue of SF AS 106 in 1990. It was commented at the time that "the proposed standard on non-pension postretirement benefits has been argued to be the most significant accounting change since the adoption of depreciation and the total impact of the standard on corporate profits has been estimated at between $200 billion and a trillion dollars" (Espahbodi et al, 1991 , pp 325). It was SFAS 106 and the well-documented effects thereof that heralded the development of other international accounting standards dealing with OPEB. There is currently little guidance in South Africa as to how OPEB should be both accounted for and disclosed in financial statements. Although AC 305 has been issued, this is merely a guideline and compliance therewith is not compulsory. There is currently some confusion as to whether AC 116, dealing with pensions, applies to other postretirement benefits. In light of this, this thesis aimed to propose an acceptable method of accounting for OPEB in South Africa bearing in mind the possible reactions of management to the disclosure of an OPEB liability and the needs of users of financial statements, who in understanding the complex issues surrounding the provision of postretirement benefits will need extensive disclosures. The TASC's harmonisation process also has to be considered as a South African pronouncement should be consistent with any standards issued by the TASC. In order to achieve this objective, a literature review was conducted on the conceptual frameworks that have been issued by the FASB, TASC, TCAEW, CTCA and the AARF. This was done so as to ensure that OPEB do in fact meet the definitions of liabilities and the recognition criteria as contained in the various frameworks. The exposure drafts and accounting standard issued by these accounting bodies were then considered so as to determine whether they were in conformity with the conceptual frameworks upon which they are based and to highlight any differences between the accounting treatments and disclosures in the various countries.

This thesis consists of an empirical investigation into the effects of firms' dividend policies on the prices of and returns realised on their ordinary shares listed on the Johannesburg Stock Exchange. A review of published theories as to whether the dividend policy of a firm ought to affect its value revealed that, under conditions approximating perfect capital markets, no dividend influence should be expected. Because of the wide range of market imperfections and their non uniform effect in the preferences they create amongst shareholders no consensus as to their aggregate influence on security returns exists. The writer's review of studies conducted by other researchers on overseas markets indicated no dividend effect. The main empirical investigation conducted by the writer into the effects of dividend policy on the value of a firm made use of cross sectional regression techniques and an expanded ex post form of the capital asset pricing model. The results of this test indicated a negative dividend preference by investors which is more likely to have resulted from the heavier taxation of dividends than capital gains, than from a dividend aversion in a perfect capital markets situation. The implication of these findings is that investors experiencing heavier taxation on dividend income than on capital gains may generally ignore the dividend policies of prospective investees, while all other investors stand to gain by biasing their investment selection toward high pay-out shares. In favouring certain pay-out ratios adequate regard must, however, be given to maintaining an adequately diversified portfolio. The test results further imply that firms may increase their value by reducing the dividend pay-out and accordingly, with capital requirements met from internal sources, reducing the amount of new capital raised through equity issues.

Includes bibliographical references. / There are a number of companies that seek dual listing in foreign stock markets. The number of foreign companies that are listed in the United States alone are above 3000. Companies seek foreign exchange listing for a number of reasons including the access to foreign capital, visibility in the foreign markets and ability to effect foreign market acquisitions through use of stock listed in the foreign markets. There are also costs associated with listing in the foreign markets, including the costs of compliance (these would include stock exchange costs, accounting and auditing compliance costs) and the costs of management time. There are a lot of studies that have been conducted in this area of finance and they show varying results. The results vary from significantly positive returns in the period before and after the listing date, to significantly negative returns before and after the listing date. There are studies that found there to be no significantly positive or negative returns. There are some that found significantly positive returns in either the pre or post listing period with significantly opposite returns in the opposing period. During the years between 1997 and 2000, a number of South African companies followed a trend of listing in their shares in the foreign markets, especially taking their primary listings to the London Stock Exchange. This study examines the effects of a foreign exchange listing in the returns of the South African companies that are listed in the foreign markets.

Bibliography: pages 209-219. / There has been much written on the ability of futures to reduce risk thereby hedging against potential market declines. However, the effect on return has been largely overlooked. This study investigates the risk and return effectiveness of hedging and hedging strategies using share index futures (SIF) market in South Africa. The empirical analysis is based on actual market data applied in terms of the most prominent hedging strategies, namely the traditional, minimum-variance, beta and Howard & D'Antonio (H&D) strategies. As hedging effectiveness is dependent on market efficiency, an analysis of the pricing efficiency of the South African market is performed with reference to the cost-of-carry valuation model and arbitrage pricing techniques. The results overwhelmingly indicate that the minimum-variance hedge strategy is the most optimal of the four strategies in terms of both risk and return. The beta hedge performed badly in terms of both risk and return (even worse than the naive traditional hedge strategy) and often led to overhedging. The beta strategy is not considered appropriate as an estimate of the minimum-variance hedge ratio in the South African situation because the futures price fluctuates significantly more than the spot index resulting in overstated hedge ratios.

Includes bibliographical references (leaves 178-184).

Bibliography: leaves 129-134. / The objective of this study was to evaluate the views of both preparers and users of financial statements on a number of issues related to South African Futures Exchange (SAFEX) financial instruments. These issues related to the perceptions of the SAFEX market price as a measure of fair value for financial reporting purposes, as well as perceptions of the International Accounting Standards Committee (IASC) asset and liability definition. These were formulated into the hypotheses set out in chapter 1. The objectives of the study were achieved by a literature search related to financial instruments and SAFEX, as well as empirical data collection through the use of postal questionnaires and the evaluation thereof.

This study sets out a qualitative assessment of the positioning and suitability of the Internal Audit Function (IAF) to perform the assessment of organisational culture within their entities. Literature relating to management science, social psychology and the Internal audit profession was analysed prior to conducting interviews with Chief Audit Executives (CAEs) and Audit Committee Chairpersons across various industries and sectors, to determine their perspectives on: 1. Establishing the definition of organisational culture. 2. Identifying what the key drivers of organisational culture are for the various organisations and assessing how it compares to theoretical framework(s) identified. 3. Determining the characteristics of the IAF that will determine whether or not the IAF is in a position to carry out these assessments. The results show varying perspectives on the definition of organisational culture, pointing to the complexity that is inherent in the process of defining culture. Participants identified key drivers of organisational culture within their organisations which were in line with those identified in the theoretical framework(s) identified, and further identified additional factors that they viewed as resulting in an impact on organisational culture. The results also point to the independence of the IAF placing them in a suitable position to perform the assessment of organisational culture, however, the background education and training they currently undergo is perceived not to provide the suitable skills to perform the assessment of organisational culture.

Bibliography: p.207-211. / Local Authorities form the third or lowest tier of government in the Republic of South Africa and are responsible for urban development and control. Although they appear to enjoy considerable freedom of action and enjoy responsible government (except in the case of the smaller Local Authorities) they operate within a system of strict Provincial supervision and control. Provincial legislation regulating their operations differs among the Provinces and only that applying in the Province of Natal has been considered. The purpose of the Local Authority accounting system is to provide information on the economic activities of these units to interested parties. These activities involve the use of public resources and, consequently, the objectives of the accounting system are management control over, and accountability for, the use of these resources. However, neither of these objectives are fully met by current Local Authority accounting practices which are designed rather for legal compliance and stewardship accountability than providing information on their economic activities. Local Authority accounting practices differ in many respects from those of private enterprise accounting. Fund accounting is employed to segregate and control resources~ control over operating income and expenditures is through the statutory budget procedure and the use of capital finance is strictly controlled. Consequently, reporting is fragmented over the various funds, planning is usually on an annual basis and there is no proper fixed asset accounting. Financial reporting by Local Authorities is mainly designed to meet their internal needs and to discharge their responsibilities to the Provincial Councils, and the information needs of the communities they serve has been given little attention. The actual reporting is through the presentation of financial statements on a fund-by-fund basis and in aggregate form prefaced by the treasurer's report and the report of the auditor. Certain Local Authority annual reports also contain a statistical section. However, the financial statements do not provide suitable information on the results of operations and the financial position of the funds of the Local Authority as a whole. The treasurer's report and the statistical section are not required by law and their contents are purely at the discretion of the individual treasurers. The auditor's report is mainly an expression of opinion on the financial statements but may include additional information which is usually of a statistical nature. Considerable changes to the reporting system, including the use of popular reports and consolidated financial statements, have been suggested. If the Local Authority accounting system is to meet its present and future needs then it should undergo considerable change and follow many of the accounting practices presently used by private enterprises. However, such changes should be developed by Local Authorities and in this respect, the responsibility to effect change rests with the Local Authorities, the Institute of Municipal Treasurers and Accountants S A and the Provincial Councils.

Bibliography: leaves 82-85. / This study provides independent empirical evidence of the strength of the relationship between changes in shareholder value and various financial measures of corporate performance. The objective is to assess whether adopting the goal of maximising EV A, instead of accounting earnings, enables management to more effectively pursue shareholder value. Firstly, the ability of EVA and accounting earnings to explain contemporaneous annual share returns is assessed. This relative information content issue is tested on a sample of 758 company year-ends from 1991 to 1997. Results indicate that accounting earnings explains 26% of the variation in cumulative abnormal returns. The comparative figure for EVA is less than 12%. This suggests that accounting earnings tends to dominate EV A in its association with share returns.