Thesis (MBA)--Stellenbosch University, 2007. / ENGLISH ABSTRACT: This research report evaluated the concept of Economic Value Added (EVA) and investigated the application of EVA as a performance measure to a particular company. It was found that EVA overcomes some of the problems associated with the traditional measures of company performance. These traditional measures are profit based and are calculated from standard accounting methods. They are inadequate measures to account for the creation of shareholder wealth, as they do not take the full cost of capital into account and also distort the economic reality of the company. It was however observed that there are limitations when applying EVA. It was found that significant effort (and associated costs) could be required to implement an EVA system in a company. The EVA calculation can also become very technical, and is heavily biased by the company's risk index (or beta coefficient), which is also a subjective measure (especially for private companies). In addition, the choice of adjustments to standard accounting methods have a significant impact on whether the company creates or destroys value in terms of EVA, and can lead to a certain degree of manipulation of the EVA calculation. In the case of the particular company reviewed, it was however found that these potential limitations were overshadowed by the benefits that can be gained from the increased focus on the creation of shareholder wealth that comes from the implementation ofEV A. It was concluded that should EVA be fully implemented at this particular company, it could form the backbone of the financial management and employee incentive system, guiding decisions made at all levels, and changing company culture so that every employee thinks and acts like an owner of the company. / AFRIKAANSE OPSOMMING: Hierdie navorsingsverslag het die konsep van Ekonomiese Toegevoegde Waarde (ETW) geevalueer, en ook die toepassing van ETW as prestasiemaatstaf by 'n spesifieke maatskappy ondersoek. Daar is gevind dat ETW sommige van die probleme wat geassosieer kan word met tradisionele maatstawwe van maatskappy prestasie (wins gebaseerde maatstawwe wat bereken word met die standaard rekenkundige metodes) kan oorkom. Hierdie maatstawwe is nie voldoende om die skepping van aandeelhouer welvaart te bereken nie, aangesien hulle nie die volle koste van kapitaal in berekening bring nie, en ook die ekonomiese realiteit van die maatskappy verwring. Daar is weI uitgewys dat ETW sekere beperkings het. Daadwerklike inspanning (asook gepaardgaande koste) kan nodig wees om 'n volle ETW implimentasie uit te voer, en die berekening van ETW kan ook baie tegnies wees. Die berekening word ook heweglik beinvloed deur die beta-koeffisient, wat op sy beurt ook 'n subjektiewe maatstaf is - veral vir privaat maatskappye. Gepaardgaande hiermee het die keuse van aanpassings aan die standaard rekenkundige metodes ook 'n groot impak op die eindproduk van ETW - of 'n maatskappy welvaart skep of vernietig. Dit kan op sy beurt lei tot 'n mate van manipulasie van die ETW berekening. In die geval van die spesifieke maatskappy wat ondersoek is in die navorsingsverslag was dit egter gevind dat die potensiele beperkings van ETW oorskadu word deur die voordele wat kan voortspruit uit die verhoogde fokus op die skepping van aandeelhouer welvaart wat gepaard gaan met die implementering van ETW. Daar was tot die slotsom gekom dat indien ETW ten volle implementeer sou word by die spesifieke maatskappy, dit die steunpilaar van die finansiele bestuur en werknemer vergoeding stelsel kan word, besluite op aIle vlakke kan beYnvloed, en die maatskappy se kultuur kan verander sodat elke werknemer kan dink en optree soos 'n eienaar van die maatskappy.

Thesis (MBA)--Stellenbosch University, 1997. / ENGLISH ABSTRACT: This study project comprises an analysis of the Cash Flow Statements of a number of delisted companies for the years in which the companies were listed on the Johannesburg Stock Exchange. The trends in the cash flow infonnation for the years prior to delisting is summarised in order to detennine whether the Cash Flow Statement can be utilised as an aid in the prediction of financial failure. The validity of the foUowing hypothesis is tested against the results of the study: If the cash flow from operations of a company is very low or negative for two years, the company will be delisted, except if an issue of shares can be done. From a sample of 46 companies, the following was derived: 16 companies encountered cash flow problems and tried to delay delisting by issuing shares. 19 companies encountered cash flow problems, but did not try to delay delisting through tbe issue of shares. 11 companies were delisted for reasons other than cash flow problems. The fmal conclusion is tbat the Cash Flow Statement can be utilised as an aid in the prediction of fmancial failure, but compliance to tbe bypotbesis does not necessarily mean tbat failure is inevitable. / AFRIKAANSE OPSOMMING: Hierdie werkstuk behels 'n ontleding van die Kontantvloeistate van 'n aantal gedenoteerde maatskappye vir die jare waarin die maatskappye genoteer was op die Jobannesburgse Effektebeurs. Die tendense wat waargeneem word in die kontantvloei oor 'n aantal jare tot en met denotering word saamgevat ten einde vas te stel of die Kontantvloeistaat gebruik kan word as hulpmiddel in die voorspelling van finansiele mislukking. Die volgende hipotesestelling word gemaak en dan getoets aan die hand van die resultate van die studie: Indien die kontantvloei uit bedrywighede van 'n maatskappy vir twee jaar baie laag of negatief is, sal die maatskappy denoteer behalwe as 'n uitgifte van aandele gemaak kan word. Uit 'n steekproef van 46 maatskappye is die volgende afgelei: 16 maatskappye het kontantvloeiprobleme ondervind en het deurgaans denotering probeer vertraag deur aandele-uitgifte te maak. 19 Maatskappye het kontantvloeiprobleme ondervind maar het die aandele-uitgifte gebruik om denotering te vertraag. 11 maatskappye is gedenoteer weens redes anders as kontantvloeiprobleme. Die uiteindelike gevolgtrekking is dat die Kontantvloeistaat wel kan dien as bulpmiddel in die voorspelling van finansiele mislukking, maar voldoening aan die hipotese beteken nie noodwendig dat mislukking onvermydelik is nie.

Thesis (MBA)--Stellenbosch University, 1997. / ENGLISH ABSTRACT: In this study it is attempted to determine whether delisting of companies on the Johannesburg Stock Exchange is preceded by certain cash flow patterns. Information was collected by summarising the Source and Application of Funds statements and Cash Flow statements of companies into a spreadsheet model. The cash flows of companies were then presented graphically over time with the intent to derive possible patterns. It was also attempted to assess the impact of depreciation on the cash flow situation, as well as the possible reasons for share Issues. Although the sample may be too small for definite conclusions, it seems as if certain cash flow patterns preceded delisting and that share issues are related to investing activities. Depreciation does not seem to have a substantial effect on the cash flow situation. / AFRIKAANSE OPSOMMING: In hierdie studie word daar gepoog om vas te steI of denotering van maatskappye op die Johannesburgse Effektebeurs voorafgegaan word deur sekere kontantvloei patrone. Inligting is versarneI deur maatskappye se Bron en Aanwending van Fondse state en Kontantvloeistate in 'n sigbladmodeI saarn te vat. Die kontantvloeie van maatskappye is dan grafies voorgesteI oor tyd ten einde moontlike patrone af te lei. Daar is ook gepoog om die impak van waardevermindering op die kontantvloei situasie te bepaaI, asook die moontlike redes vir aandeeluitgifte. AlhoeweI die monster moontlik te klein is vir definitiewe afleidings wil dit tog voorkom of sekere kontantvloei patrone denotering voorafgaan en dat aandeeluitgifte verband hou met investeringsaktiwiteite. Dit blyk dat waardevermindering nie 'n wesenlike rol in die kontantvloei situasie speel nie.

Thesis (MBA)--Stellenbosch University, 2011. / Corporate environmental responsibility has engaged the attention of academics, practitioners and environmentalists for some time, creating pressure for companies to conduct business in an environmentally greener manner. To find economic support for such conduct by South African companies, this study aims to investigate whether superior environmental performance by South African listed companies leads to superior financial performance. A review of related literature identified significant diversity in research approach and methodology as well as environmental and financial performance measures employed and therefore also in the results obtained. Given the continuing emergence of climate change as a material issue for business, this study utilised South African Carbon Disclosure Leadership Index (CDLI SA) ratings as proxy for South African companies’ environmental performance. The infancy of the Carbon Disclosure Project in South Africa does result in some data limitations which necessitated a portfolio approach to address the research question. This approach, however, prevented explicit consideration or judgement on the direction of causality between environmental and financial variables. The environmental performance data limitations and the resulting need for some assumptions resulted in this study being explorative in nature. Using CDLI SA ratings as distinguishing environmental performance characteristic, industrymatching, mutually-exclusive stock portfolios were constructed. Relative portfolio performance was measured with reference to the Sharpe and Treynor ratios and a simple statistical test. Considering the three years 2008 to 2010, the Sharpe and Treynor ratios for Environmental Leaders and Laggards portfolios did not clearly identify either Environmental Leaders or Environmental Laggards as superior financial performers and results also varied across industries. There appears to be some trend emerging which sees Environmental Leaders outperforming Environmental Laggards in more recent years for some industries, however, the short time frame under consideration provided insufficient support for such conclusion. Statistical means testing concluded that the mean returns of Environmental Leaders and Environmental Laggards are similar. Sensitivity analysis performed on the Financials sector indicated that the Sharpe and Treynor ratios are sensitive to portfolio construction. Despite this sensitivity, statistical means testing consistently found little evidence to infer that the mean returns of Environmental Leaders portfolios are either higher or lower than that of Environmental Laggards portfolios. It is suggested that the similar performance of the Environmental Leaders and Environmental Laggards portfolios may be attributed to the use of an environmental performance measure unable to sufficiently distinguish between environmental leaders and environmental laggards. Another interpretation of the results could be that investors consider disclosure-based environmental performance measures as unreliable, or less reliable as compared with outcome-based or combined measures. Finally, it may be that investors’ expectations have not yet been adjusted to reflect the fact that climate change constitutes a materiality issue for business in the long run, which will require companies to actively manage carbon risks. Although there exists voluminous international research on the topic of this study, South African research in this regard is restricted. This study adds to the existing body of South African specific research, but is only explorative in nature; therefore areas for future research have been recommended.

Thesis (MDF)--Stellenbosch University, 2014. / Small and medium enterprises are recognised around the world as very important to a country’s economic wellbeing. In developing countries, small and medium-sized businesses are seen as effective vehicles that can quickly deliver much needed economic development, increased employment, wealth creation and, ultimately, reduction in the poverty levels. However, these businesses fail to deliver the much-touted economic and social-welfare benefits. This failure is attributed to the many challenges that small and medium enterprises face, among which is a critical lack of access to bank financing. Credit-guarantee schemes in sub-Saharan Africa have over the past decades become a preferred intervention to try and get more bank financing flowing to small and medium enterprises. In 2009, the Government of Zambia implemented the National Credit Guarantee Fund as its intervention measure to unlock constrained bank credit to the country’s small and medium enterprises. Experience with credit-guarantee schemes in sub-Saharan Africa, including Zambia, has been rather disappointing. This study therefore aimed to review the Zambia National Credit Guarantee Fund with respect to its operational design, implementation and usage, evaluating the extent to which the design and implementation met international best practice. The study also sought to find out whether the design of the scheme sufficiently considered the local context of small- and medium-enterprise financing and whether it was attractive enough for the local commercial banks in Zambia. Using an extensive literature review, survey questionnaires sent to all commercial banks registered in Zambia as well as structured interviews of senior banking and government officials, the study found that, despite the Zambian credit-guarantee scheme having proper and adequate design that conformed to international best practice, it was unable to attract the needed participation of the local commercial banks. We conclude that, while proper and adequate designs of credit-guarantee schemes are important in the success of the schemes, this by itself will not attract the participation of commercial banks in an economy like Zambia’s. We infer from the results of the study that certain other interventions, such as the improvement of the financial- and business-management capabilities of small- and medium-enterprise management, must be put in place before mechanisms such as welldesigned credit-guarantee schemes can be expected to achieve their intended aim.

Dissertation (PhD)--University of Stellenbosch, 2007. / ENGLISH ABSTRACT: This thesis is made of stand-alone essays on the capital structure and financing of Small and Medium Enterprises (SMEs) in Ghana and South Africa. Chapter Two reviews issues on SME development in Ghana and South Africa. Chapter Three compares the capital structures of large, quoted firms and SMEs in Ghana. The results show that quoted firms exhibit higher debt ratios than those of SMEs. The results suggest that age, size, asset structure, and profitability of the firm affect the capital structures of quoted firms and SMEs. For the SME, it is evident that level of education and gender of the entrepreneur, industry, and location of the firm are also important in explaining their capital structure. Chapter Four examines the determinants of bank financing of SMEs in Ghana. The results reveal that bank financing accounts for less than a quarter of SMEs’ debt financing, with short-term bank credit representing the greater proportion of bank finance. The results show that age, size, asset tangibility, and growth of the firm have positive associations with long-term bank debt, while profitability is negatively related to long-term bank debt. The short-term debt indicates a positive relationship with size, but negative relationships with profitability, and growth. Chapter Four also investigates the awareness and use of various financing schemes available to the Ghanaian SME sector. The results reveal low awareness and usage levels of these financing initiatives. Chapter Five explores the determinants of Ghanaian small and medium sized non-traditional exporters’ (NTEs) choice of formal/informal finance. The results show that NTEs depend on formal financing sources with bank finance representing the greater percentage of NTEs’ financing. The results suggest that, newer firms depend more on formal finance and less on informal finance. The results show positive relationships between formal finance and size, and growth of the firm. Chapter Six assesses how corporate governance affects the performance of SMEs in Ghana and what the implications are for financing opportunities. The results reveal that better corporate governance structures lead to better performance of SMEs. The paper concludes that the adoption of good corporate governance structures could lead to better management decisions and enable SMEs to attract financing resources. Chapter Seven examines the relationship between agency factors and the capital structure of quoted SMEs in South Africa. The results indicate that firms with one institutional blockholder are able to monitor the opportunistic behaviour of management more effectively than those with more than one institutional blockholders. Chapter Eight looks at the financial market and financing choice of SMEs and large firms in South Africa. The results indicate that developments in the financial market affect both longterm debt/equity and short-term debt/equity decisions of large firms. However, for SMEs, it is the long-term debt/equity decision that is affected by the financial market. The final essay examines the effect of debt policy on the performance of SMEs in Ghana and South Africa. The results indicate that long-term debt and total debt ratios negatively affect performance of SMEs. These findings have important implications for policy-makers, entrepreneurs and managers of SMEs. / AFRIKAANSE OPSOMMING: Hierdie tesis bestaan uit losstaande essays oor die kapitaalstruktuur en finansiering van kleinen middelgrootte-ondernemings (KMO's) in Ghana en Suid-Afrika. Hoofstuk Twee kyk na kwessies oor KMO-ontwikkeling in Ghana en Suid-Afrika. Hoofstuk Drie vergelyk die kapitaalstrukture van groot genoteerde maatskappye en KMO's in Ghana. Die resultate dui daarop dat genoteerde maatskappye groter skuldverhoudings as KMO's toon. Hierdie resultate wys ook dat ouderdom, grootte, batestruktuur en die winsgewendheid van die maatskappy die kapitaalstruktuur van genoteerde maatskappye en KMO's beïnvloed. Dit is vir die KMO voor die hand liggend dat die opvoedingsvlak en geslag van die entrepreneur, die bedryf en die ligging van die maatskappy ook belangrik is om die kapitaalstruktuur daarvan te verduidelik. Hoofstuk Vier ondersoek die bepalende faktore vir bankfinansiering vir KMO's in Ghana. Die resultate toon aan dat bankfinansiering rekenskap gee van minder as 'n kwart van die KMO se skuldfinansiering en dat korttermynbankkrediet die grootste gedeelte van die bankfinansiering verteenwoordig. Die resultate toon aan dat ouderdom, grootte, die tasbaarheid van bates en maatskappygroei op 'n positiewe verwantskap met langtermynskuld dui, terwyl winsgewendheid 'n negatiewe verband met langtermynbankskuld het. Die korttermynskuld toon 'n positiewe verwantskap met grootte maar 'n negatiewe verwantskap met winsgewendheid en groei aan. Hoofstuk Vier ondersoek ook die bewustheid en gebruik van verskeie finansieringskemas wat aan die Ghanese KMO-sektor beskikbaar is. Die resultate bring 'n lae bewustheid en gebruiksvlakke van hierdie finansieringsinisiatiewe aan die lig. Hoostuk Vyf verken die bepalende faktore van die Ghanese klein- en middelgrootte nie-tradisionele uitvoerders (NTU's) se keuse van formele/informele finansiering. Die resultate toon aan dat NTU's op formele finansieringsbronne staat maak en dat bankfinansiering die grootste persentasie van die NTU's se finansiering uitmaak. Uit die resultate kan afgelei word dat nuwer maatskappye meer op formele finansiering staat maak en minder op informele finansiering. Die resultate dui op 'n positiewe verwantskap tussen formele finansiering en grootte, en die groei van die maatskappy. Hoofstuk Ses evalueer die invloed van korporatiewe bestuur op die prestasie van KMO's in Ghana en watter implikasies dit vir finansieringsgeleenthede inhou. Die resultate toon aan dat beter korporatiewe finansieringstrukture by KMO's tot beter prestasie lei. Hierdie essay kom tot die gevolgtrekking dat die aanvaarding van goeie korporatiewe bestuurstrukture tot beter bestuursbesluite kan lei en KMO's in staat kan stel om finansieringsbronne te lok. Hoofstuk Sewe ondersoek die verwantskap tussen agentskapfaktorering en die kapitaalstruktuur van genoteerde KMO's in Suid-Afrika. Die resultate dui daarop dat maatskappye met een institusionele blokhouer die opportunistiese gedrag van bestuur meer doeltreffend kan monitor as dié met meer as een institusionele blokhouer. Hoofstuk Agt kyk na die keuses wat KMO's en groot maatskappye in Suid-Afrika ten opsigte van finansiële markte en finansiering maak. Resultate toon aan dat ontwikkelings in die finansiële mark besluite oor die langtermynskuld/aandelekapitaal sowel as die korttermynskuld/aandelekapitaal van groot maatskappye beïnvloed. By KMO's is dit egter besluite oor langtermynskuld/aandelekapitaal wat deur die finansiële mark beïnvloed word. Die laaste essay ondersoek die uitwerking van skuldbeleid op die prestasie van KMO's in Ghana en Suid-Afrika. Die resultate toon aan dat langtermynskuld en totale skuldverhoudings die prestasie van KMO's negatief beïnvloed. Hierdie bevindinge het belangrike implikasies vir beleidmakers, entrepreneurs en die bestuurders van KMO's.

This thesis provides an empirical case study as to whether, and, how the macro political dynamics might lead to the micro organisational changes of cost management practices in public sector organisations. It draws on Dillard et al.'s (2004) version of institutional theory complemented by Burns and Scapens' (2000) model. Empirical data for the thesis came from an extended case study (Burawoy, 1998) of a state-owned enterprise in the Egyptian Electricity and Energy (E&E) Sector, in which semi-structured interviews, field observations and documentary analysis were deployed as the data collection methods. The thesis highlights the necessity of seeing cost management change, especially in the politically sensitive public utilities in less developed countries, as an institutional political change that brings together the wider political objectives of the state and the narrower economic objectives of the firms. Accordingly, it provides a political theorisation for cost management change in the public sector. There, the dynamics are the fact that the E&E costs in the Egyptian business environment are historically managed at three distinct but interrelated institutional levels: political level, field level, and organisational level. For example, with the failure of re-privatisation attempts, new forms of periodic control reports have emerged including a 'cost report' which has been instrumental in changing managerial actions and behaviours. With modernisation programmes accompanied by reprivatisation attempts, initiated by the Egyptian government and supported by the international development agencies such as the World Bank and the European Union, advanced ERP technologies have been brought in to institutionalise costing rules and routines. With ERP, the organisational management under what are effectively military practices has re-defined cost management processes into a single procedural protocol.

Chen, Chen. / Thesis (M.Phil.)--Chinese University of Hong Kong, 2010. / Includes bibliographical references (p. 89-94). / Abstracts in English and Chinese. / Table of Contents --- p.vi / Chapter 1 --- Introduction --- p.1 / Chapter 2 --- Literature Review --- p.6 / Chapter 2.1 --- Operations and Finance Interface --- p.6 / Chapter 2.1.1 --- Single Period Setting --- p.6 / Chapter 2.1.2 --- Multi-Period Setting --- p.11 / Chapter 2.2 --- Trade Credit --- p.13 / Chapter 2.3 --- Supply Chain Contracts --- p.14 / Chapter 3 --- The Model --- p.16 / Chapter 3.1 --- Model Description --- p.16 / Chapter 3.1.1 --- The Basic Setting --- p.17 / Chapter 3.1.2 --- The Bank Loan Setting --- p.19 / Chapter 3.1.3 --- The Trade Credit Setting --- p.19 / Chapter 3.2 --- Demand Distribution Properties --- p.22 / Chapter 4 --- Retailer's Perspective --- p.24 / Chapter 4.1 --- The Single Period Problem --- p.24 / Chapter 4.2 --- The Basic Setting --- p.33 / Chapter 4.3 --- The Bank Loan Setting --- p.37 / Chapter 4.4 --- The Trade Credit Setting --- p.43 / Chapter 4.5 --- Summary --- p.47 / Chapter 5 --- Supplier's Perspective --- p.48 / Chapter 5.1 --- Single Period Results --- p.48 / Chapter 5.1.1 --- The Basic Setting --- p.49 / Chapter 5.1.2 --- The Bank Loan Setting --- p.53 / Chapter 5.1.3 --- The Trade Credit Setting --- p.60 / Chapter 5.2 --- Two-Period Problem --- p.69 / Chapter 5.3 --- Summary --- p.71 / Chapter 6 --- Numerical Study and Insights --- p.72 / Chapter 6.1 --- The Single Period Supply Chain --- p.72 / Chapter 6.1.1 --- Impact of Different Financing Schemes --- p.73 / Chapter 6.1.2 --- Supply Chain Efficiency --- p.77 / Chapter 6.2 --- Capital Constrained Retailer in Two-Period Setting --- p.79 / Chapter 6.2.1 --- Impacts of Different Financial Schemes on the Retailer --- p.79 / Chapter 6.2.2 --- Saving for the Future --- p.82 / Chapter 6.2.3 --- Comparison of the Single- and Two-Period Settings --- p.83 / Chapter 7 --- Conclusion and Future Research --- p.84 / Appendix / A Log-concavity of Some Common Distributions --- p.87 / Bibliography --- p.89

Thesis (MBA) --University of Limpopo, 2010 / Small, Medium and Micro-Enterprises (SMMEs) as vehicles of growth, innovation and social transformation, are important categories of businesses which must be nurtured and harnessed by the South African authorities. This should enable them to quickly and effectively adapt to the challenges of globalization thereby benefiting the economy. The importance of SMMEs to the South African economy has already been acknowledged by government. Despite the growth in venture capital funding, access to funding remains a problem for small enterprises, in particular for empowerment groups in South Africa. In most surveys among small enterprises, the provision of concessionary finance comes out as one of the most urgently felt needs. Indeed extensive research reveals that access financing is one of the several important factors that are critical for business survival and growth while other factors are market access and lack of financial management skills. South Africa’s financial sectors have always been reluctant to provide comprehensive services for the fragmented, risk-prone and geographically dispersed small enterprises sector. Evidence of management skills and business knowledge are indications of how well an entrepreneur can perform important tasks and activities related to the eight functions of a business, which are: general management, operations, finance, purchasing, human resources,marketing, administration and external relations. One of the major hurdles that face entrepreneurial endeavours is the shortage of financial management skills. South Africa shows a grim picture of the skills gap. SMMEs become the hardest hit as the entire commerce sector forages for the scarcest skills. Small enterprises have been victims of instances of developing their employees only to lose them to bigger firms offering more lucrative incentives and currently SMMEs in South Africa’s expanding construction sector are losing the fight in the battle for scarce skills. Although government has tried to put in place policies and institutions with the aim of improving the accessing of finance by small business owners, their success has been minimal. It is, therefore, imperative that management capability and financial management acumen be regarded as key to accessing funding by the entrepreneurs themselves, and the parties involved in supporting and promoting them. It is important to bear in mind that training in entrepreneurial skills without training in business skills will not ensure optimal results. A combination of training to develop entrepreneurial skills and business training is most effective in preparing and developing successful entrepreneurs. Therefore, this study is an assessment on access to financial management services by SMMEs in Thohoyandou Business Centre, as funding has a bearing on the economic development and sustainability of SMMEs. The research wanted to establish if the SMMEs in Thohoyandou Business Centre had access to financial management services support and, if they have, are the SMMEs ready to receive these financial management services? The study revealed that the SMMEs do not possess financial management skills neither do they have access to financial management services although most of them acknowledged that there is a need for these skills for the success of their businesses. The lack of requisite bookkeeping and financial management skills results in most financial institutions being unwilling to provide funds to this sector, resulting in entrepreneurs relying on their own sources of finance which are limited as shown in the study. Management capability strengthens the financial capacity of SMMEs. Financial institutions are prone to be favourably biased towards SMMEs who can demonstrate eloquence in areas such as financial management (including basic bookkeeping), marketing and technology upgrading. It is recommended that government and other facilitators incorporate simplified components into their training packages to cover such areas as bookkeeping and compilation of business plans

The thesis investigates the link between internal and external funds in financing new investment when asymmetric information is important. In both chapter, the entrepreneur has private information about the value of a project and, if the quality of the project is high, she tries to signal this to outside investors. The first chapter explores the tradeoff between using internal funds and raising external funds by issuing shares or bonds to finance a project. The entrepreneur can delay the project to accumulate internal funds over time from existing operations. This allows an entrepreneur with a high quality project to reduce her reliance on expensive underpriced bond or share issues. However, accumulating funds is also costly because of discounting and the risk that the project disappears. The more valuable the good project, the less the entrepreneur will delay the project, risking its loss, and so the more she relies on external financing. When external financing is sought, the entrepreneur decides to issue bonds or shares. The greater the value of the good project, the more underpriced shares are relative to bonds. Thus an entrepreneur with a highly valuable good project chooses equity and one with a less valuable project chooses debt. Combining the two results shows that for a highly valuable good project, debt is used, and for a less valuable project, internal funds are used. External equity gets squeezed out. Aggregate data for the U.S. confirm that corporate bond issues are a more important source of funds than new share issued. Furthermore, most small firms rely on internal funds and debt, rather than external equity to finance their projects. The second chapter provides a new theory for the underpricing of initial public offerings (IPOs). As in the first chapter, underpricing is used as a signal of quality. However, the entrepreneur is risk averse and only underprices when she cannot sell enough primary (new) shares to raise sufficient proceeds from the IPO to cover the cost of the project without diluting her position below that needed to signal a high project value. Underpricing allows the entrepreneur to maintain a high stake in the firm and still make a credible signal of quality. This allows more primary shares to be sold resulting in a net increase in proceeds. The model predicts that underpricing should be greatest among firms that don't sell secondary shares (shares held by insiders) at the IPO and that there should be a positive relationship between the firm's capital requirement and the initial return among this group of firms only. A switching regression framework is used. The probit model is first estimated where the probability of no secondary shares is explained by proxies for a firm's capital requirements. The initial return is then regressed on the same proxies, conditioning on whether the firm sells secondary shares or not and accounting for possible correlation between errors in the selection and regression equations. Strong support is found for the positive relationship between initial return and capital requirements for only firms without secondary share sales, as predicted.