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 (MBA (Business Management))--University of Stellenbosch, 2007. / AFRIKAANSE OPSOMMING: Verskeie navorsingsprojekte is oor die jare gedoen ten opsigte van die voorspellingsmoontlikhede van kontantvloei en winste, met teenstrydige resultate. Daar is egter weinig navorsing gedoen oor die verhouding wat tussen winste en kontantvloei bestaan. Hierdie navorsingsverslag beoog om ondersoek in te stel na die verhouding tussen kontantvloei en winste, dus om te poog om te bepaal watter een die drywer is, maar ook om te bepaal of die een veranderlike ingespan kan word om vooruitskattings ten opsigte van die ander te kan doen. Aangesien finansiële tydreekse die meeste van die tyd nie-stasionêr is, moet dit in ag geneem word wanneer die kousale verwantskap tussen die twee veranderlikes bepaal word, asook wanneer regressie-analise met die oog op vooruitskatting gedoen word. Daar word egter vermoed dat die aspek van stasionariteit weinig aandag geniet in menige navorsing wat ten opsigte van finansiële tydreekse gedoen word. Die feit dat weinig tydreekse stasionêr is, is bevestig deur te toets vir die bestaan van eenheidswortels in die veranderlikes. Die beste resultate vir stasionariteit is verkry deur die tweede verskille van die veranderlikes te bereken. Daar kon egter nie met sekerheid vasgestel word of winste kontantvloei dryf of andersom nie. Die gevaar van skyn-korrelasie is ook bewys, aangesien 'n groot aantal pare veranderlikes beduidende korrelasies tussen mekaar aandui, maar wanneer hulle stasionariteit en kousaliteit in ag geneem word, is weinig van die pare veranderlikes kousaal verwant aan mekaar. Die toets vir ko-integrasie is ingespan om steun te verleen by die regressie-analise en vooruitskatting van die tydreekse. Die regressie analise van die geko-integreerde tydreekse het in die meeste gevalle 'n hoë R2 en aangepaste R2 gelewer. Die vooruitskattings was egter teleurstellend onakkuraat. / ENGLISH ABSTRACT: Throughout the years a variety of research projects have been done about the predictive ability of cash flow and earnings, with contradictory results. However, limited research has been done about the relationship between cash flow and earnings. The aim of this research report is to investigate the relationship between cash flow and earnings, thus attempting to determine which one is the driver, but also to investigate the ability of one variable to predict the other. Because financial time series are non-stationary most of the time, this fact has to be taken into account when the causal relationship between the two variables is determined, as well as when regression analysis is done with forecasting in view. It is, however, suspected that the fact of stationarity has been neglected in much of the research that has been done on financial time series. The fact that very few time series are stationary has been established by testing for the existence of unit roots in the variables. The best results for stationarity were obtained by calculating the second differences of the variables. It could not be established beyond doubt whether earnings cause cash flows or vice versa. The danger of spurious correlation has been proved, because a vast number of pairs of variables indicates a significant correlation with one another, but when stationarity and causality are taken into account, only a few pairs of variables are truly significantly correlated to one another. The test for co-integration was used to assist in the regression analysis and forecasting of non-stationary time series. The regression analysis of most of the co-integrated variables resulted in a high R2 and adjusted R2. The forecasted values, however, were disappointingly inaccurate. / cmc2010

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.

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.

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.

Firms can use financial derivatives to hedge risks and thereby decrease the probability of bankruptcy and increase total expected tax shields. Firms also can adjust their operational policies in response to fluctuations in prices, a strategy that is often referred to as "operational hedging". In this paper, I investigate the relationship between the optimal financial and operational hedging strategies for a firm, which are endogenously determined together with its capital structure. This allows me to examine how operational hedging affects debt capacity and total expected tax shields and to make quantitative predictions about the relationship between debt issues and hedging policies. I also model the effects of asymmetric information about firms' investment opportunities on their financing and hedging decisions. First, I examine the case in which both debt and hedging contracts are observable. Then, I study the case in which firms' hedging activities are not completely transparent. The models are tested using a data set compiled from the annual reports of North American gold mining companies. Supporting evidence is found for the key predictions of the model under asymmetric information.