M.Com. (Financial Management) / The concept of social responsibility has been in existence for centuries, but the modern notion of corporate social investment (CSI) only emerged in the 1950s. Since then, the adoption of initiatives and integration of CSI by corporations has seen a steady growth, primarily driven by stakeholders. The rise of CSI can also be attributed to a better understanding of its associated business benefits. The relationship between CSI and company performance has been investigated since the mid-1970s and consensus about this relationship has still not been reached. In this study, secondary data from company reports is used to perform a panel regression analysis to determine the relationship between CSI and company financial performance for 30 South African companies listed on both the FTSE/JSE Socially Responsible Investment (SRI) Index and FTSE/JSE Top 40 Index for the period 2010 to 2013. The relationship between the financial performance measures, return on assets (ROA), earnings per share (EPS) and CSI was confirmed as positive while the relationship between CSI and return on equity (ROE) was confirmed as negative. Mixed or inconsistent results makes it impossible to support the notion of a positive or negative relationship for the study overall. The results of this study only prove a relationship between CSI and financial performance in South Africa for the relevant companies and cannot therefore be generalised.

This thesis includes four essays, of which each comprises two original contributions. Based on this thesis’ eight contributions, we add knowledge or understanding to the literatures on responsible investment, research output analyses and investment performance evaluation. First, we develop the first generic, reliable approach to benchmark research area output (e.g. journal articles or books), which we expect to appeal to governments’ increasing interest in monitoring their research funding investments. Second, we apply this approach to the research area of responsible investment, which is currently backed by an about $ 7 trillion industry. We find that the (quality weighted) quantity of responsible investment’s research output is statistically significantly under-proportional compared with peer research areas. One of several explanations for this result lies in the intransparency of the current responsible investment literature. Third, we develop an approach to research synthesis, which improves a research area’s transparency without experiencing many weaknesses of conventional literature reviews. We title this approach Influential Literature Analysis (ILA). Fourth, we apply ILA to the relatively intransparent responsible investment literature. One of our many findings is that responsible assets with their ceteris paribus under-proportional total risk might appear artificially unattractive when assessed by the most common investment performance measure, the Sharpe ratio, which is biased in favour of high risk assets due to its currently unsolved negative excess return problem. Fifth, we develop a generic, reliable and robust solution to the negative Sharpe ratio problem, which investors can customise according to their specific increasing incremental disutility of risk functions. Six, we generalise our solution to the negative Sharpe ratio problem, which allows us to solve the negative (excess) return problems of over twenty other investment performance measures. Seventh, we develop independent, statistically sophisticated tests of the sufficiency and quality of suggested solutions to the negative Sharpe ratio problem, since all existing tests a-priori assume the superiority of a specific solution. In contrast, our tests are only based on the Sharpe ratio itself and two basic axioms of investment theory. Hence, they are conceptually unrelated to our solutions. Eighth, we apply these tests using two different data samples to all existing solutions to the negative Sharpe ratio problem. We find that investors are best advised to use our solutions, the H⁶-, H⁷- or H⁸-measure, in their evaluation of investment performance from a Sharpe ratio like perspective.

A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management specialising in Entrepreneurship and New Venture Creation, Johannesburg, 2016 / Purpose Social investors are driven to sustainable investing for many different reasons: impact investors are concerned about the environment, social impact on the communities, as well as the sustainability and growth of their funds. Measuring that social impact can assist these organisations and fund managers to prove to their investors that their initiatives are benefiting the communities in which they operate. Measuring impact also helps social enterprises to evaluate their needs, aspirations, resources and incentives for their customers. It leads to improvement in performance, which often leads to job creation, survival and growth. This research evaluated and discussed impact investing industry in South Africa and focused on the effects or outcomes of the selected four major measurement metrics, namely: social impact, innovativeness, replicability and sustainability – for the fund managers. These measurement metrics were evaluated to ascertain if they would result in organisational performance/growth. Design, methodology and approach This is a survey based empirical study with 159 respondents who are players in the impact investing industries. A descriptive quantitative method was used to address the proposed relationships between measuring metrics and growth of the organisations. The instrument was checked for validity and for reliability: the variables were operationalised and measured against multi-dimensional scales. Analyses for the proposed relationships were measured using multiple regression and correlation analysis. Findings Results showed that impact organisations tend to grow more when they are transparent and accountable for their endeavours. Investors will increase funding to the fund managers who show in their reports how their objectives have been achieved. The study selected only four measurement metrics and tested how they affect growth of an organisation through increased funding. The results show that ii two metrics (social impact and sustainability) had a positive relationship with the growth of the organisation, meaning that the more the organisations report on the impact they are making in communities and the more they show how self-sustainable they are, the more the organisations showed signs of growth. The results also showed that when social organisations are innovative, they are able to replicate their projects into more communities. Research limitations and implications Main implications of this research are that fund managers will source more funds to grow their initiatives if they show transparency and accountability. If they report on how much social impact they are causing, how their initiatives have been innovative, how replicable they are and how self-sustaining the initiatives are, then impact investors will consider increasing their funding, resulting in growth. Contribution of study Impact investing industry is still new and requires more research to be conducted, especially in the South African context. Previous research has concentrated on definitions and on how to measure impact but not many have zoomed into the measurement metrics and analysed what they mean to the fund managers as well as to the investors. This research was conducted in order to cover that research gap. / GR2018

The growth of the managed investment industry brings with it the potential for institutional investors to exert their influence on boards of listed companies to deliver strong and sustainable growth. The concepts of socially responsible investment (SRI), responsible investment (RI) or ethical investment (EI) have become part of mainstream investment practices in many financial markets. While SRI is largely a qualitative concept, its survival and adoption by the mainstream investment community may, in part, be due to the formalising of its concepts into language that investors, asset managers and analysts can more readily understand: the benchmark index. SRI indices may hold the key to attracting attention to ESG issues in listed corporates and to help bring about positive outcomes in sustainable development. Figures show SRI investments in emerging markets are minimal when compared to those in developed markets but emerging markets hold great potential for growth and development of these tools. This research develops a tool for bringing together social construction theory and stakeholder theory in understanding the construction of SRI Indices and in development of new indices. The core of this research is an analysis of SRI indices in three major emerging markets of Hong Kong, India and China, together with an analysis of different perspectives of SRI in Asia. The purpose is to identify opportunities to building SRI indices through a stakeholder engagement approach. The research was conducted over several phases between October 2008 and August 2010 and can be defined by three different studies: 1. a comparative study on SRI indices and their ESG criteria; 2. a comparative study on SRI indices and their stakeholder engagement approach; and 3. an analysis on the feasibility of building SRI indices in Asian markets. The findings from the three studies indicate three main arguments. First, ESG assessment and criteria of SRI indices does have an impact on the creditability and value of the SRI indices. Due to the lack of transparency on the ESG assessment and criteria, SRI investors and other stakeholder groups are deterred from adopting SRI indices as SRI tool. Second, stakeholder engagement is essential for SRI indices. And lastly, SRI indices in emerging markets, especially in the three studied markets, are attractive to both global and local SRI investors; however, these SRI indices need to include local ESG contexts to reflect the actual ESG concerns of the societies and avoid blindly following developed markets’ SRI index model, which in the end become unrealistic and unpopular to investors and stakeholder groups. We recommend that stakeholder engagement in index criteria and corporate assessment be widened and deepened; that governments and stock exchanges can play a pivotal role in SRI development and should take the lead. We also recommend that SRI indices strengthen the institution of corporate research to rely less on secondary data when making their corporate assessments. / published_or_final_version / Kadoorie Institute / Doctoral / Doctor of Philosophy

No description available.

Corporate Social Investment (CSI) presents a platform for the business sector in South Africa to respond to challenges facing the Eastern Cape. Challenges facing this province are well documented, and it is important to measure and quantify how the business sector in South Africa currently contributes towards addressing those challenges. The Eastern Cape remains by and large undeveloped, with economic activity well below economic potential. Currently, economic activity is concentrated in Port Elizabeth, East London and Mthatha. Notwithstanding economic growth, high levels of unemployment and poverty persist, particularly in the rural areas where two-thirds of the population reside. The research study purposely sampled the top 30 companies from the top 100 listed in Trialogue. A total of 14 questionnaires were completed and returned by respondents. Five CSI managers were randomly selected from the 30 companies for in-depth interviews. The purpose of this exercise was to solicit further views to enable substantive triangulation of data from other sources. The research reveals that corporate groups in South Africa use different but complementary models and strategies in contributing towards poverty reduction. Education, particularly support for secondary school technology and science tuition, and also early childhood development (ECD), constitute key intervention areas by corporations in the Eastern Cape. This is closely followed by economic inclusion or enterprise development. There is no demonstrable evidence that corporate social investment in South Africa is informed by a coherent theoretical framework. The study revealed that education receives the largest share of CSI budgets in the Eastern Cape. Within education, mathematics and science is the most supported sub-programme focus area. This is followed by higher education which is also a preferred sub-programme focus area. A total of 40 percent of CSI spending has been channeled towards rural areas and towns in the former Transkei area. The ‘Mandela factor’ also plays an influential role in thedistribution of CSI spending, especially in the rural areas of the former Transkei. Donations ‘in kind’ are mostly distributed in urban areas.

A thesis submitted to the Faculty of Commerce Law and Management, University of the Witwatersrand, Johannesburg, in fulfilment of the Degree of Doctor of Philosophy / Ethical investing has become increasingly prevalent in recent years and mirrors a rise in shareholder activism, consumer ethics and corporate social responsibility. Shariah funds are a subset of ethical funds. The rise in popularity of ethical funds has raised questions as to whether ethical funds perform better than conventional funds, and whether ethical funds are riskier than conventional funds. A number of studies have been carried out in different countries utilising the traditional performance measures as well as factor models to determine the risk profile and returns of ethical funds compared to conventional funds. These studies have shown that the results are country specific and hence each country needs to be analysed separately. The aim of this study is to investigate ethical funds (incorporating Shariah funds) in the South African context. The study examines the performance and risk profile of ethical funds relative to conventional funds utilising traditional performance methods as well as the CAPM model and Fama French 3-factor model. Furthermore, the study determines the factors that influence investors to invest in ethical funds and to examine their investment preferences when choosing between conventional funds and ethical funds through a survey of Muslim investors. Finally, the study examines the role of advertising in ethical fund investment and investigates whether the marketing material of ethical funds is aligned to investor requirements by utilising content analysis to compare the fact sheets of various mutual funds for the presence of factors identified as important by investors. The empirical results show that conventional funds outperformed ethical funds with a greater variability of return over a truncated time period. Both ethical and conventional funds were driven primarily by the market return with no clear style bias. In fact, ethical funds had a stronger beta to the ALSI than to the JSE SRI index. The qualitative analysis showed that the sampled investors perceived conventional funds as offering better returns, but being more risky. The sampled investors were willing to undertake financial sacrifice in order to invest according to their faith. The most important source of information regarding investments was cited as professional advice, followed by word of mouth and advice from family and friends. Advertising came in behind these factors and was not an influential source of information for the sampled investors. The factors most important to investors when deciding to invest in a fund was the philosophy of the fund (i.e. it’s investment strategy or ideology) followed by the risk profile of the fund and past returns of the fund. The content analysis showed that the factsheets of South African mutual funds were aligned to the factors identified by the sample of investors as most important with influencing their decision to invest. Moreover, conventional funds focused more on returns than risk, with ethical funds focusing more on risk than return – thus funds tended to emphasise their strong points most in their factsheets. / MB2016

Thesis (MBA)--Stellenbosch University, 2005. / ENGLISH ABSTRACT: This is an exploratory study that examines how companies within the South Africa insurance sector approach the area of Corporate Social Investment (CSI). South Africa is burdened with a number of pressing social problems- such as unemployment. HIV/AIDS and crime - and in many respects the insurance industry is on the front-line; as these problems have a direct impact on their core business. The primary research, upon which the findings are based, consist of ten qualitative interviews with individuals who were either responsible for CSI within their organisation or were involved in the decision-making process. Its main aim is to understand the motivations and drivers that underpin corporate giving programmes. In particular, the study focuses on how social investment is managed within the context of a society that is undergoing social transformation. It also touches on the question of self-interest and how this impacts on giving programmes. Notably. the study observed a major shift in how companies set-about their social investments post-1994. These include a more business-like approach in which corporations were managing CSI, a move away from utilizing CSI as a marketing tool, and integrating CSI with other aspects of corporate social responsibility. The research also identified a change in the rationale and philosophies underpinning involvement in CSI. Coupled with this is added external pressure from government and investors, as well as self-imposed drivers arising out of the Financial Sector Charter. / AFRIKAANSE OPSOMMING: Hierdie is 'n ondersoekende studie wat fokus op die benadering van die Suid Afrikaanse versekerings sektor tot die area van Korporatiewe Sosiale Beleggings (KSB). Suid Afrika word geteister deur 'n aantal drukkende sosiale probleme - soos werkloosheid, MIV/VIGS en misdaad - en in baie gevalle is die versekeringsektor in die voorste linie deurdat hierdie kwessies direk impak maak op hul kern besigheid. Die primere navorsing in hierdie verslag is gegrond op tien kwalitatiewe onderhoude met individue wat verantwoordelikheid dra vir KSB binne hul organisasies, of ten minste betrokke is by besluitneming daarrondom. Die hoof doelstelling is om die motivering en drywers te verstaan wat KSB onderspan. In besonder kyk die studie na die bestuur van KSB binne die konteks van 'n samelewing wat sosiale transformasie ondergaan. Die studie raak ook die vraag aan van self-belang en hoe dit impak maak op skenkingsprogramme. Dit is nodig om te let op die punt dat daar 'n groot skuif was in die manier wat maatskappye KSB benader post 1994. Dit sluit 'n sterker besigheidsbenadering in, 'n beweging weg van KSB as 'n bemarkings-instrument, asook die integrasie van KSB met ander aspekte van korporatiewe sosiale verantwoordelikheid. Die studie het ook veranderinge identifiseer in die redes en filosofiee wat dien as grondslag vir KSB. Ook verwant aan dit is die addisionele druk van regering en beleggers, asook die self-opgelegde drywers wat voortspruit uit die Finansiele Sektor Handves.

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

ESG (Environmental, social, and governance) investing is an investment philosophy to inform holistic and sound decision-making of investors for the purposes of both, nourishing a stable economy with acceptable rates of return while at the same time addressing stakeholders' non-financial concerns to preserve an inhabitable planet. Some scholars in finance argue that institutions subject to norms, i.e. responsible investors pay a financial cost from engaging in ESG activities. Moreover, they see ESG investing as distracting, inappropriate, risky and legally challenging. In response, several studies have emerged to show that ESG investing is a growing interest with investors, helps to mitigate financial risks, and does not need to represent a financial cost. Despite convincing evidence in a growing body of academic literature, many questions are still open to debate. Therefore, the principal objective of this thesis is to explore three dimensions of ESG investing, namely corporate environmental responsibility, renewable energy, and ESG disclosure quality. The research questions address issues relating to pension funds' investment decisions and legal obstacles resulting from utilising ESG information, financial return and risk implications of investing in renewable energy, substitutability of renewable energy for fossil fuel investments, and the effects of ESG disclosure quality on the expected cost of capital. To answer these questions, the thesis employs several standard and alternative empirical methods from the asset pricing and risk literatures. The thesis concludes the following. First, the integration of environmental responsibility into pension fund investment decision-making processes does not impede the financial and risk performance of pension funds. This means that pension funds should be allowed to consider such information in their investment decision making processes as the information does not reduce the overall financial return of the tested portfolios and does not violate trust law, i.e. the Employee Retirement Income Security Act (ERISA). Pension fund trustees have been prohibited to consider any non-financial criteria such as environmental, social, or governance criteria in their investment processes under trust law such as ERISA, when they could harm the finanical performance of the portfolio. To be more specific, a pension fund trustee breaches his fiduciary duties (the duty of loyalty and the duty of prudence), if he sacrifices the financial well-being of the pension fund for pursuing any other social goal (Langbein and Posner, 1980). In particular, the duty of loyalty is "... forbidding the trustee to invest for any object other than the highest return consistent with the preferred level of portfolio risk" (Langbein and Posner, 1980:98). Second, the thesis finds no evidence for sustained renewable energy equity premia. Furthermore, investments in renewable energy equity are considerably riskier than in fossil fuel energy equity, meaning that renewable energy firms are undergoing a period of high uncertainties related to their business model, low carbon prices, and lacking public and private infrastructure investment (Bohl et al., 2013; Kumar et al., 2012; Sadorsky, 2012b ). Finally, my thesis shows that companies with high ESG disclosure quality experience lower expected cost of equity and cost of debt financing, everything else equal.