Thesis (MComm (Business Management))--University of Stellenbosch, 2009. / Measuring the performance of any financial portfolio is only relevant if compared relative to another similar portfolio. Over the years the norm in the industry has been to use market capitalisation indices as benchmarks to measure performance. Market capitalisation indices, such as the FTSE/JSE ALSI, create a natural return drag because of the overweighting of overvalued stocks and the underweighting of undervalued stocks. It is this return drag that led to the creation of the Fundamental Indexing concept by Research Affiliates in 2005. Fundamental Indexing weights stocks based on their economic footprint in the market rather than their market capitalisation. The Fundamental Indexing approach uses four metrics, namely sales, book values, dividends and cash flows to calculate this economic footprint. The Fundamental Index is referred to as the RAFI (Research Affiliates Fundamental Index) Index The Fundamental Index concept delivered very good results when applied to the South African stock market. The South African RAFI Composite Index outperformed the FTSE/JSE All Share Index by 5.55% p.a. compounded annually during the period 1995 to 2006. This return was achieved with a similar risk profile as the FTSE/JSE All Share Index. This index also had similar turnover rates relative to the FTSE/JSE All Share Index. The South African RAFI Composite Index also outperformed the FTSE/JSE All Share Index by 5.48% p.a. compounded during the measurement period when investment income is included. The Fundamental Index outperformance clearly disproves the efficient market hypothesis. According to modern portfolio theory it is impossible to earn abnormal profits in excess of a market capitalisation index. The success of Fundamental Indices proves that market capitalisation indices are not optimal and deliver sub-optimal returns. Specifically, it can be seen that the South African market is inefficient and that the FTSE/JSE All Share Index is not the best tool for measuring the performance of the financial markets in South Africa.

Thesis (MComm)--Stellenbosch University, 2012. / ENGLISH ABSTRACT: Investment styles and more particularly the relative outperformance of certain styles under differing market conditions have been widely researched. Furthermore, investment professionals are constantly on the lookout for factors that could possibly be indicative of the subsequent outperformance of certain investment styles. With the value-growth phenomenon at the centre of this debate, there is an attempt in this study to shed some light on this anomaly from a purely South African perspective. Using monthly data for the period 1991 to 2011, and calculating price-to-book value (P/B) ratios for all the stocks included in the FTSE/JSE All-Share Index, the methodology employed by The Brandes Institute (2009A), based on work of Lakonishok, Shleifer and Vishny (1994), will be utilised in this study in order to determine whether the relative outperformance of value stocks over growth stocks can be anticipated in advance. Stocks were ranked monthly on the basis of their relative P/B ratios and subsequently four new portfolios were created each month, with the growth portfolio consisting of the highest 25% P/B ratio stocks and the value portfolio capturing the lowest 25% P/B ratio stocks. After portfolio creation, quartile-by-quartile performance was tracked over the following five years. The relative performance of the value versus growth portfolio was compared to the valuation difference multiple, calculated as the median P/B ratio of the growth portfolio divided by the median P/B ratio of the value portfolio, to determine if a relationship existed between valuation disparities and the subsequent relative performance of value and growth stocks. The all-cap (FTSE/JSE All-Share Index) segment was further divided into large-cap (FTSE/JSE Top-40 Index), mid-cap (FTSE/JSE Mid-cap Index) and small-cap (FTSE/JSE Small-cap Index) segments in order to determine if a consistent relationship could be identified within different market capitalisation sectors of the market. A significant relationship was found between the valuation difference multiple and subsequent performance of value and growth stocks in all segments of the JSE Mainboard. Historically, the higher the valuation difference multiple, the higher the subsequent outperformance of value stocks over the subsequent five-year period, as compared to growth stocks. This was found to be significant within the FTSE/JSE All-Share Index, the FTS/JSE Top-40 Index, the FTSE/JSE Mid-Cap Index and the FTSE/JSE Small-Cap Index. An exception to the above findings was the post-2002 period within the FTSE/JSE Top-40 Index. During this period it was not possible to identify a relationship between the valuation difference multiple and subsequent value stock outperformance. / AFRIKAANSE OPSOMMING: Verskillende beleggingstyle en meer spesifiek, die relatiewe uitprestering van sekere style onder verskillende mark omstandighede, is wyd nagevors oor die afgelope paar dekades. Professionele beleggers is ook gedurig op die uitkyk vir moontlike faktore wat die uitprestering van sekere beleggingstyle vooraf kan aandui. Met die waarde-groei verskynsel sentraal in hierdie debat, is die doelwit in hierdie studie om die waarde-groei verskynsel te ondersoek vanuit 'n eg Suid-Afrikaanse mark perspektief. Deur maandelikse data vir die periode 1991 tot 2011 te gebruik en daaropvolgende prys-tot-boekwaarde (P/B) verhoudings te bereken vir al die aandele wat deel was van die FTSE/JSE Alle-Aandele Indeks, sal daar in hierdie studie die metodologie van 'The Brandes Institute' (2009A) in die Verenigde State van Amerika, gebaseer op die werk van Lakonsihok, Shleifer en Vishny (1994), toegepas word om te probeer bepaal of die relatiewe uitprestering van waarde aandele oor groei aandele vooraf voorspel kan word. Aandele is maandeliks ingedeel op die basis van hul onderskeie P/B verhoudings. Deur hierdie proses is daar maandeliks vier nuwe portefeuljes geskep, met die groei portefeulje wat die hoogste 25% van P/B verhouding aandele bevat het en die waarde portefeulje wat die laagste 25% van P/B verhouding aandele verteenwoordig. Prestasie beoordeling van die nuut geskepde portefeuljes was die volgende stap in die navorsingsproses waar kwartiel-tot-kwartiel prestasie beoordeling oor die daaropvolgende vyf-jaar periode na portefeulje ontstaan, plaasgevind het. Die relatiewe prestasie van die waarde en groei portefeuljes is vergelyk met die waardasie pariteit maatstaf, wat bereken is as die mediaan P/B verhouding van die groei portefeulje gedeel deur die mediaan P/B verhouding van die waarde portefeulje. Hierdie vergelyking is gebruik om te bepaal of 'n verhouding tussen die onderskeie waardasies van groei en waarde aandele en daaropvolgende prestasie bestaan. Die alle aandele segment is verder ook opgedeel in drie onderskeie indekse om te bepaal of 'n verwantskap binne al die verskillende markkapitalisasie sektore bestaan. Die grootste markkapitalisasie aandele is verteenwording deur die FTSE/JSE Top-40 Indeks; die medium markkapitalisasie aandele deur die FTSE/JSE Mid-Cap Indeks; en die kleinste markkapitalisasie aandele wat deel vorm van die FTSE/JSE Alle-Aandele Indeks is verteenwoording deur die FTSE/JSE Small-Cap Indeks. 'n Beduidende verwantskap is gevind tussen die waardasie pariteit maatstaf en daaropvolgende vyf-jaar prestasie van waarde en groei aandele. Histories hoe hoër die waardasie pariteit maatstaf, hoe groter die relatiewe uitprestering van waarde aandele oor die daaropvolgende vyf-jaar periode. Hierdie verskynsel is beduidend gevind vanuit 'n FTSE/JSE All-Share Indeks, FTSE/JSE Top-40 Indeks, FTSE/JSE Mid-Cap Indeks en FTSE/JSE Small-Cap Indeks perspektief. 'n Uitsondering was die FTSE/JSE Top-40 Indeks vir die periode na 2002, waar dit nie moontlik was om 'n beduidende verwantskap te identifiseer nie.

Submitted in partial fulfillment of the requirements for the degree of Masters of Management Sciences Business Administration, Durban University of Technology. Durban, South Africa, 2017. / The discipline of corporate finance has undergone numerous transformations over the past two-and-a-half decades. One such change has been in the area of corporate finance. Driven by certain behavioral biases, it has been observed that managers sometimes make subjective decisions that do not always follow the norms of traditional corporate finance. One such behavioral influence is overconfidence or optimism. There is a paucity of research on the impact that managerial overconfidence through corporate investments has on the general movement of a company’s share price. This study bridges that gap by investigating the effect of managerial overconfidence on the share price of 10 companies from the JSE/FTSE top 40 index. Its main objective was to inspect the relationship between managerial overconfidence and share price. The results show the presence of managerial overconfidence observed through the investment-cash flow sensitivity of firms. The fixed effects panel regression reveals that Tobin’s Q which is the proxy measure of the investment-cash flow sensitivity of a firm, does affect the share price. Holding every other explanatory variable constant, an increase in Tobin’s Q causes the share price to rise, which leads to the conclusion that managerial overconfidence does have an influences on the stock price. It is further observed that managerial overconfidence tends to increase with firm size. This is shown by the weak positive correlation between the Q ratio and LnTA, and Q ratio and sales. In order to avoid the possible loss in value of a firm caused by an overconfidence manager, it is recommended that shareholders or owners ensure that the manager clearly understands the company’s objectives and vision. Due to the resultant influence of managers’ on the value of a company’s stock, investors should not only look at a company’s past performance, as well as the price earnings ratio (PE ratio), dividend yield, DPS, or any other market value ratios. They should also consider the characteristics of the CEO before making their investment decisions. / M

This study aims to investigate the relationship between private saving and investment for South Africa using a Vector Error Correction Framework. Saving and investment are considered to be important factors for sustainable economic growth in the country, particularly as these variables have been recorded at significantly lower levels than those of other developing nations. By examining the direction of causality between saving and investment, the most suitable policy measures can be used in stimulating either savings or investment, and as a result aggregate growth. The study found a positive two-way causality to exist between these two variables, proving that both saving and investment-led policies are necessary in raising saving and investment levels. With the inclusion of credit extension as the third variable used to remove any variable bias, the study not only found credit extension to Granger cause private saving, but the reverse relationship was found to be present as well. This relationship was however found to be negative, confirming that lower borrowing constraints may have a negative effect on saving levels. The negative relationship between credit supply and private saving (substitution effect) proves that credit supply will only yield a positive result for savings if channelled through investment expenditure.

The application of internet marketing techniques has been widespread in the hospitality sector worldwide, with many hotels crafting websites for marketing purposes. However, there is still a debate and speculation on the impact of internet marketing on business performance and profitability. Given the well-recognised value of internet marketing in the hospitality and tourism industry, this study sought to examine the impact of internet marketing on the profitability of the hospitality sector in South Africa and to establish factors which influence internet marketing usage. In order to achieve these objectives, a perceptual survey was conducted in graded hotels and lodges in the Eastern Cape province of South Africa. Multiple linear regression analysis and hierarchical regression analysis were used to determine the relationship between internet marketing and business profitability as well as the relationship between organisational and environmental factors and internet marketing usage. Based on the findings of this study, it is concluded that the use of internet marketing can positively influence business profitability. It is also concluded that internet marketing experience moderates the relationship between internet marketing usage and business profitability. The results also indicate that factors such as technological competence, managerial support, level of star grading and alliances significantly influence internet marketing usage. Thus, from the findings of this study, it was concluded that hotels and lodges can enhance their profitability through internet marketing usage.

In South Africa, over-the-counter (OTC) bond options may be used in order to either hedge or speculate. However, since 2001, this market deteriorated significantly. The current research assessed the role of the local bond option market, reasons for the deterioration of the South African OTC bond option market, and how this bond option market could possibly be restored as a primary hedging instrument. The opinions of individuals operating in this market were obtained using a questionnaire. In the opinion of the respondents, wide bid–offer spreads, regulatory interferences and poor participation within this market caused market deterioration. The market could be restored as a hedging instrument if effective market integration exists, interbank trading regularly takes place, liquidity was enhanced, transparency increased and investor knowledge improved. Future research could focus on regulatory transformation, the types of derivatives used for hedging, and an assessment of appropriate continuous professional development interventions for investors. / Business Management / M. Com. (Business Management)

This research established the determinants of the investment choices between the RSA Government Retail Bonds and the stokvel by salaried individuals. The research carried out a comparative analysis between the two investment instruments. The main data was drawn from FinMark for the period 2011 to 2015. The research used a combination of data tables and graphs to analyse frequency (distribution) of use in each of the investment choices. The research used Pearson’s Chi square and Fishers’ t-test to determine the distribution, independence and Cramer’s V coefficient was applied to establish the correlation between the investment choices and the demographic under review. The outcome of the research indicated that more than risk or return inherent in the investment instruments under review, social, psychological and cultural disposition towards these investment instruments played a significant part in influencing the investment choices under review. Furthermore, lower educated individuals at low salary levels had the highest usage in stokvel and the highly educated at the higher level of education opted to invest in the RSA Government Retail Bonds. There was a very low usage in both the investment instruments by the ‘no formal education’ and primary education levels. Pearson’s Chi square and Fishers’ exact tests indicated that, race, education, location and salary levels can be used to explain the differences in investment choices between the RSA Government Retail Bonds and stokvel. According to these tests, age was statistically insignificant to explain the effects of the demographics under review on making investment choices. The results indicate that racial, educational, salary and location differences need to be properly factored into the policy development in so far as investment and savings are concerned. / Finance, Risk Management and Banking / M. Com. (Business Management)

In South Africa, over-the-counter (OTC) bond options may be used in order to either hedge or speculate. However, since 2001, this market deteriorated significantly. The current research assessed the role of the local bond option market, reasons for the deterioration of the South African OTC bond option market, and how this bond option market could possibly be restored as a primary hedging instrument. The opinions of individuals operating in this market were obtained using a questionnaire. In the opinion of the respondents, wide bid–offer spreads, regulatory interferences and poor participation within this market caused market deterioration. The market could be restored as a hedging instrument if effective market integration exists, interbank trading regularly takes place, liquidity was enhanced, transparency increased and investor knowledge improved. Future research could focus on regulatory transformation, the types of derivatives used for hedging, and an assessment of appropriate continuous professional development interventions for investors. / Business Management / M. Com. (Business Management)

The disclosure of headline earnings is one of the JSE Limited (JSE)’s listing requirements. All listed entities are required to comply with this disclosure requirement. Guidance in the form of The Circular on headline earnings is issued by the South African Institute of Chartered Accountants (SAICA), and is updated every time when there are changes to the International Financial Reporting Standards (IFRS). The Circular adopts a rules-based approach and specifies what is included and excluded in the calculation of headline earnings. The rules consist of general rules, which apply to all entities other than those industry groups with special provisions such as the life insurance entities. This study questions whether a rules-based headline earnings approach or a principles-based approach is more appropriate for the calculation of headline earnings of listed property entities on the JSE, for economic decision-making purposes. The research method consisted of questionnaires that were sent out to stakeholders. The responses from the CFOs and investment analysts show that principles-based headline earnings guidance is preferred over rules-based headline earnings guidance. / Business Management / M. Phil (Accounting Sciences)

It is generally acknowledged that the share price of listed companies is not usually a true reflection of the value imbedded in the said companies. The main purpose of this study is to explore the correlation between selected performance measurement tools, namely Return on Equity (ROE) and Economic Value Added (EVA®), and the share price of companies listed on the Johannesburg Stock Exchange. The study is a quantitative one as it uses data extracted from McGregor BFA database to investigate the relationship between the variables studied. Correlation and linear regression analyses were used in determining such relationships. This study found that there is a synergy in using ROE and EVA® as performance measurement tools and that their interaction explains 8.06% of the movement in the share price of listed companies, all things being equal. Hence it is recommended to identify and study possible synergies between other performance measurement tools. / Management Accounting / M. Phil. (Accounting Sciences)