Includes bibliographical references. / The aim of this paper is to investigate Shoprite’s decision to issue convertible bonds despite South African firms tending to favour traditional forms of debt or equity. The paper first revisits the theory on convertible debt to consider the possible reasons for why Shoprite elected to issue convertible debt, and then develops two models, the first to quantify Shoprite’s debt capacity and cost of debt, the second to value the convertible bond issue, and quantify the benefit, if any, that convertible bonds achieved as opposed to a straight debt or equity issue.

Includes abstract. / Includes bibliographical references (leaves 76-79). / The aim of this study is to identify whether there is a difference in performance between shares meeting the Islamic investing criteria and the market in an emerging market context. The proxy for the Islamic market is the FTSE South Africa Islamic Index. The returns on this index are compared to three proxies for the market using single and multiple regression models: (1) the All Share Index on the JSE in a single factor regression (2) the Resources Index and Financial/Industrial Index in a two factor model (3) a four factor model developed by Carhart (1997) that accounts for size, growth and momentum in the market in addition to the All Share Index.

Includes abstract. / Includes bibliographical references. / This paper updates aspects of the original study done by Collinet in his 2001 UCT Masters Thesis “Characterising Persistence of Performance amongst South African General Equity Unit Trusts”, in which he tested performance persistence over the period 1980 to 1999. This updated study focuses on testing whether the performance of a unit trust fund in one period can be used to predict the performance of that unit trust fund in a subsequent period. The overall results of the updated study were comparable to the Collinet (2001) study, although in the Collinet study evidence of short-term performance persistence was found when holding periods of 6 months were tested. The results for the 1, 2 and 3 year holding periods tested were inconclusive and no evidence was found that performance persists over any of those holding periods...

Includes abstract. / Includes bibliographical references. / For several decades equity-based compensation has been used as a tool to align the incentives of company executives and employees with those of the company shareholders. For instance globally, during the 1990's, there was and explosion in the issuance of employee stock options. This served several purposes, namely - to motivate managers in the pursuit to increase company value and achieve long-term goals, as a retention tool for talented staff and also as a way for cash strapped young companies to reward employees without the need to divert cash from operating activities.The objective of this study is to examine the current long-term share-based incentive schemes used by JSE listed companies based on data from 50 large and mid cap companies. It aims to identify trends in terms of prevalent scheme types, average scheme size relative to issued share capital, settlement methods, valuation models used, construction of model inputs and the use of performance conditions.

This study argues that the financing options available to PPPs in the South African financial market are limited and only few traditional financing solutions, such as commercial bank debt, are available to project developers. While traditional financing solutions may provide an attractive and easy to obtain financing solution, they are not necessarily optimal, cheap or able to provide the best value for money (National Audit Office, 2001). This suggests that the South African financial market, which is so critical to the success of PPP projects, may in fact be hindering the development and efficiency of the market. The main research questions addressed in this study are: * what is a PPP and what does its typical structure look like; * what is the state of the South African PPP market including framework and number of projects procured; * what financing options and models are available to PPPs worldwide; and * what financing solutions have been employed on South African projects? In answering these questions, we particularly focus on the financing options available to PPPs. As part of this overview we discuss private sector and public sector solutions. Private sector solutions discussed include equity, debt and mezzanine finance. We give particularly focus to debt financing which tends to make up the majority of financing in a typical PPP. Public sector solutions include government contributions, guarantees as well as hybrid structures.

Includes bibliographical references. / The equity transfer of Black Economic Empowerment deals has been the basis that still defines the Black Economic Empowerment landscape. Black Economic Empowerment concepts are identified with endeavours in South Africa to increase the participation of Black people in business and the mainstream economy. In recent years, equity transfer has been the main benchmark to signify the extent to which a company is empowered. This new construct is Black Economic Empowerment. Black Economic Empowerment is a concept, which is broadly accepted in principle, but is still controversial in its meaning and practice. This report looks at the commonly, agreed and understood Black Economic Empowerment net equity transfer of selected Black Economic Empowerment transactions versus the effective net equity transfer. Its also examines the role that funding structures, funding institutions, the government and private sector play in Black Economic Empowerment transaction. The effect of debt in Black Economic Empowerment transactions, and the impact it has on the effective transfer of net equity interest to Black people will also be examine in this report. The study will also look into the need for Affirmative Action, the state of Black Business and its historical development and its contribution to Black Empowerment. The successes of Black Economic Empowerment transaction are contrasted against the transaction failures, while the report examines the cause of these failures. The findings of the study concludes that only one percentage of the selected transaction in the study yielded a net effective interest greater or equal to the announced transaction.

Includes abstract. / Includes bibliographical references. / Research in behavioural finance has shown that individuals do not always behave rationally. As a result of this they do not make investment decisions in such a way as to maximise their expect- ed utility. Certain behavioural biases have been found to explain this behaviour. Furthermore, differences have been observed in how these biases manifest in men and women. Men have been found to be more overconfident when estimating their own skills and chances of success. Hence, they tend to exhibit stronger self-efficacy and self-attribution biases. Differentials in the risk preferences of men and women are apparent: men display higher risk tolerances and women are more risk averse. A sample of 19,021 individual investors from a South African investment house was analysed over five years (2007 - 2011) in order to draw conclusions on the trading behaviour.

During recent decades, researchers have developed the value relevance method of accounting based research. Value relevance, at its core, attempts to describe the information usefulness of a disclosure figure in relation to the impact it has on the market values of a given stock. Much of the focus of this research, both internationally and locally, has been based on earnings or balance sheet disclosures with little attention being paid to other sections of disclosure. This study takes the use of value relevance methods one step further and analyses the information usefulness of operating cash flow disclosures of financial firms versus non-financial firms in a South African context. The study proceeds to explain and then test the presumption that the nature of the banking business model makes operating cash flow disclosures irrelevant; some interesting and somewhat counter-intuitive results are obtained.

Includes bibliographical references. / This study analyses the impact that operating lease capitalisation has on key financial statement ratios and failure prediction indicators of listed South African companies operating within five sectors (namely General Industrials, Industrial Transportation, Food & Drug Retailers, General Retailers and Travel & Leisure), as well as whether the impact thereof is substantially the same as the new proposed accounting treatment for Type A and Type B leases in terms of ED/2013/6 (IASB, 2013). Furthermore, the extent of lease usage in South Africa and whether the size of a company has a bearing on its extent of leasing is examined. Additional analysis is also performed investigating the materiality of straight-lining and onerous contract provisions relating to operating leases, as well as the impact of operating lease capitalisation on disclosed loan covenants. Based predominantly on the constructive operating lease capitalisation method developed by Imhoff, Lipe and Wright (1991 & 1997), a refined constructive lease capitalisation model is developed in this study which incorporates aspects of current lease accounting rules not previously considered, namely provisions recognised in respect of the straight-lining of operating leases as well as onerous operating lease contracts. This model also incorporates the new proposed lease accounting rules which require the capitalisation of all leases (Type A and Type B). The results indicate that the capitalisation of future non-cancellable operating lease commitments have a significant impact on key financial statement ratios and failure prediction indicators, most notably leverage and other debt-related ratios. Furthermore, of the five sectors analysed, retailers were the most affected. When considering the new proposed accounting treatment for Type A and Type B leases, the results indicate that operating lease capitalisation has substantially the same impact on key financial statement ratios and Altman‟s failure prediction models as the conventional operating lease capitalisation method, except for certain debt-related and profitability ratios. Further results indicate that operating leases are used extensively and substantially more than finance leases within South Africa. It was also found that operating lease usage was positively related to company size, while finance lease usage decreased as company size increased. Curvilinear relationships were also noted between a company‟s size and its extent of leasing. Further analysis revealed that recognised straight-lining lease provisions are substantially more material than recognised onerous lease contract provisions and are capable of distorting the analysis of operating lease capitalisation if ignored. When scrutinising loan covenants disclosed, it was established that none of the loan covenants were breached when capitalising operating leases; however, in each instance operating lease capitalisation negatively impacted all covenant related ratios.

Includes abstract. / Includes bibliographical references (p. 41-45). / This study investigates the possible explanatory factors behind the mispricing in dual traded assets, using Mondi Holdings (the PLC listed on the London Stock Exchange and the LTD listed on the Johannesburg Stock Exchange) as a case study. The study documents the existence of substantial mispricing between the Mondi twins, with the LTD trading at an average premium of 9% over the sample period. However, the reclassification of the PLC shares on the JSE resulted in a significant and sharp decline in the LTD premium to an average of 3%, an indication that regulatory controls were significant in sustaining a larger part of the price deviations.