Thesis (MBA (Business Management))--University of Stellenbosch, 2009. / ENGLISH ABSTRACT: Corporate governance in South Africa (SA) has been promoted since 1994 with the release of the King report which was the first code of corporate governance in the country. This has since been updated in 2002, and most recently in 2009. In previous independent assessments of corporate governance in South Africa, the country has been commended for its corporate governance standards. As a large institutional investor the Public Investment Corporation (PIC) actively encourages high standards of corporate governance in the companies in which it invests. Therefore, the PIC wanted to develop a matrix to assess the current corporate governance standards of listed companies in South Africa in order to assist with investment decisions, and to actively promote high standards. Therefore, the skills and knowledge of an expert panel were called upon in order to develop a robust assessment tool that incorporates best practice, but remains locally relevant. The intention was to not only focus on disclosure, but to also incorporate an assessment of conformance and performance. This was then applied to the Johannesburg Stock Exchange (JSE) top 40 companies. The aim of the study was not only to assess the corporate governance of these companies, but also to critically review the matrix to ensure it is an effective assessment tool. In addition the link between corporate governance, company performance, and company valuation was investigated as these variables are commonly reported in the literature to be positively correlated. Various aspects of board diversity, including age, gender and ethnicity, were also researched as this was identified as a critical issue in the South African context. Factors that have been shown to affect board diversity in the literature were also investigated. Following this the link between board diversity and company performance was studied as there is limited information regarding this relationship in the literature. Various limitations of the matrix were identified and in many instances related to what had previously been reported in the literature. However, a significant relationship was not found between corporate governance and company performance, and, the relationship between corporate governance and company valuation was negative. This may be due to limitations of the study, and therefore, a definitive conclusion cannot be drawn. In terms of the demographics of the boards of the JSE top 40 companies, most directors fall between the ages of 51 and 60 years, 14.5 per cent of board members are female, and 32.5 per cent of directors are black. There was a trend towards a positive relationship between diversity of age and board size, while no relationship was found between shareholder diversity and board diversity, and interestingly board ethnic diversity was found to be positively correlated with company performance. / AFRIKAANSE OPSOMMING: Korporatiewe beheer in Suid-Afrika is sedert 1994 bevorder met die uitreik van die King-verslag wat die eerste kode vir korporatiewe beheer in die land was. Hierdie verslag is sedertdien opgedateer in 2002 en mees onlangs in 2009. In vorige onafhanklike beoordelings van korporatiewe beheer in Suid-Afrika, is die land aangeprys vir sy korporatiewe beheerstandaarde. As ‟n groot institusionele belegger, moedig die Public Investent Corporation (PIC) aktief hoë standaarde van korporatiewe beheer aan in die maatskappye waarin hy belê. Die PIC wou daarom ‟n matriks ontwikkel om die huidige korporatiewe beheerstandaarde te beoordeel van die genoteerde maatskappye in Suid-Afrika ten einde te help met beleggingsbesluite en om hoë standaarde aktief aan te moedig. Die kennis en vaardighede van ‟n paneel deskundiges is daarom ingeroep om ‟n robuuste beoordelingshulpmiddel te ontwikkel wat die beste praktyke sou insluit, maar plaaslik relevant sou bly. Die bedoeling was ook om nie net op openbaarmaking te fokus nie, maar ook beoordeling van nakoming en prestasie in te sluit. Dit is dan op die Johannesburgse Effektebeurs (JSE) se top 40 maatskappye toegepas. Die doel van die studie was nie net om die korporatiewe beheer van hierdie maatskappye te beoordeel nie, maar ook om die matriks krities te beoordeel om te verseker dat dit ‟n effektiewe beoordelingshulpmiddel is. Die verwantskap tussen korporatiewe beheer, maatskappy prestasie, en maatskappy waardasie is verder ook ondersoek aangesien hierdie veranderlikes algemeen in die literatuur as positief gekorreleer beskryf word. Verskeie aspekte van direksie diversiteit, insluitend ouderdom, geslag en etnisiteit, is ook nagevors aangesien hierdie sake as kritiese kwessies binne die Suid-Afrikaanse konteks geïdentifiseer is. Faktore wat in die literatuur geblyk het die direksie se diversiteit te beïnvloed, is ook ondersoek. Hierna is die verwantskap tussen direksie diversiteit en maatskappy prestasie ook ondersoek aangesien daar beperkte inligting oor hierdie verwantskap in die literatuur bestaan. Verskeie beperkinge van die matriks is geïdentifiseer en hou in baie gevalle verband met dit wat reeds voorheen in die literatuur beskryf is. Geen beduidende verwantskap is egter gevind tussen korporatiewe beheer en maatskappy prestasie nie, en die verwantskap tussen korporatiewe beheer en maatskappy waardasie was negatief. Dit mag wees as gevolg van beperkings van die studie, en daarom kan ‟n beslissende gevolgtrekking nie gemaak word nie. In terme van die demografie van die direksies van die JSE se top 40 maatskappye, is die meeste direkteure tussen 51 en 60 jaar oud, 14.5 persent van direksielede is vroulik, en 32.5 persent van direkteure is swart. Daar was ‟n tendens tot ‟n positiewe verwantskap tussen diversiteit van ouderdomme en direksiegrootte, maar geen verwantskap is gevind tussen aandeelhouer diversiteit en direksie diversiteit nie, en dit is interessant dat direksie etniese diversiteit gevind is om positief gekorreleer te wees met maatskappy prestasie.

Thesis (MBA (Business Management))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: This research report investigated whether evidence of volatility clustering exists on the FTSE/JSE Top 40 Index. The presence of volatility clustering has practical implications relating to market decisions as well as the accurate measurement and reliable forecasting of volatility. This research report was conducted as an in-depth analysis of volatility, measured over five different return interval sizes covering the sample in non-overlapping periods. Each of the return interval sizes' volatility were analysed to reveal the distributional characteristics and if it violated the normality assumption. The volatility was also analysed to identify in which way, if any, subsequent periods are correlated. For each of the interval sizes one-step-ahead volatility forecasting was conducted using Linear Regression, Exponential Smoothing, GARCH(1,1) and EGARCH(1,1) models. The results were analysed using appropriate criteria to determine which of the forecasting models were more powerful. The forecasting models range from very simple to very complex, the rationale for this was to determine if more complex models outperform simpler models. The analysis showed that there was sufficient evidence to conclude that there was volatility clustering on the FTSE/JSE Top 40 Index. It further showed that more complex models such as the GARCH(1,1) and EGARCH(1,1) only marginally outperformed less complex models, and does not offer any real benefit over simpler models such as Linear Regression. This can be ascribed to the mean reversion effect of volatility and gives further insight into the volatility structure over the sample period. / AFRIKAANSE OPSOMMING: Die navorsingsverslag ondersoek die FTSE/JSE Top 40 Indeks om te bepaal of daar genoegsame bewyse is dat volatiliteitsbondeling teenwoordig is. Die teenwoordigheid van volatiliteitsbondeling het praktiese implikasies vir besluite in finansiele markte en akkurate en betroubare volatiliteitsvooruitskattings. Die verslag doen 'n diepgaande ontleding van volatiliteit, gemeet oor vyf verskillende opbrengs interval groottes wat die die steekproef dek in nie-oorvleuelende periodes. Elk van die opbrengs interval groottes se volatiliteitsverdelings word ontleed om te bepaal of dit verskil van die normaalverdeling. Die volatiliteit van die intervalle word ook ondersoek om te bepaal tot watter mate, indien enige, opeenvolgende waarnemings gekorreleer is. Vir elk van die interval groottes word 'n een-stap-vooruit vooruitskatting gedoen van volatiliteit. Dit word gedoen deur middel van Lineêre Regressie, Eksponensiële Gladstryking, GARCH(1,1) en die EGARCH(1,1) modelle. Die resultate word ontleed deur middel van erkende kriteria om te bepaal watter model die beste vooruitskattings lewer. Die modelle strek van baie eenvoudig tot baie kompleks, die rasionaal is om te bepaal of meer komplekse modelle beter resultate lewer as eenvoudiger modelle. Die ontleding toon dat daar genoegsame bewyse is om tot die gevolgtrekking te kom dat daar volatiliteitsbondeling is op die FTSE/JSE Top 40 Indeks. Dit toon verder dat meer komplekse vooruitskattingsmodelle soos die GARCH(1,1) en die EGARCH(1,1) slegs marginaal beter presteer het as die eenvoudiger vooruitskattingsmodelle en nie enige werklike voordeel soos Lineêre Regressie bied nie. Dit kan toegeskryf word aan die neiging van volatiliteit am terug te keer tot die gemiddelde, wat verdere insig lewer oor volatiliteit gedurende die steekproef.

Thesis (MComm (Business Management))--University of Stellenbosch, 2006. / For the last 40 years, academics advocated the use of the traditional Discounted Cash Flow (DCF) techniques but these suggestions were ignored by practitioners for a long time. The Net Present Value (NPV), Internal Rate of Return (IRR) and Present Value Payback Period (PVPP) are now some of the more widely used traditional DCF-based techniques, especially among large firms. However, academics are now criticising these techniques as they are based on rigid assumptions that ignore the management of flexibility in projects. The Real Option Valuation (ROV) is suggested as an alternative technique because it implicitly incorporates this flexibility in project valuation. With ROV, opportunities in projects are treated as real options and are therefore valued using financial option principles. Real options give the firm the opportunity to act on an investment project (invest, abandon, rescale) at a later date, when more information is available. As with the traditional DCF-based techniques in the past, few firms seem to have adopted ROV despite academics’ recommendations. This study is thus aimed at determining through a survey, whether the largest firms in South Africa, specifically those included in the JSE/FTSE Top 40 index, are using ROV. Based on the results of the survey, it is concluded that firms generally do not use ROV as only nine percent of the respondents were found to be using it. This is largely attributed to managers being unaware of the technique, and to some extent, to the technique’s complexity. On the other hand, managers were generally found to recognise the flexibility despite not using ROV, although it was not confirmed whether they quantify this flexibility.

Thesis (MBA (Business Management))--University of Stellenbosch, 2008. / ENGLISH SUMMARY: During the period of change in South Africa in the year of the first democratic elections, 1994, the first King Report on Corporate Governance appeared. For the first time in South Africa, companies had a good reference for corporate practice and conduct. A second King report, commonly referred to as King II, appeared in March 2002 and expanded on the earlier Code to produce, what was considered at the time to be, a world-class code of corporate governance. In addition to the acceptance and incorporation of King II into corporate governance practice, the JSE included compliance with the King Code as part of its listing requirements. The code itself is not an enforceable set of rules, but rather guidelines to assist companies in implementing principles of good governance. In similar vein, the JSE has given companies the flexibility to justify non-compliance. This underscores the socalled comply or explain philosophy to which corporate governance in South Africa subscribes. Studies have found the level of corporate governance in South Africa to be high, especially for an emerging market. Compliance with corporate governance principles and transparency go hand in hand. In a comply or explain regime, where the regulation is considered to be done by the market, disclosure of compliance is especially important. The goal of this research project was to conduct a survey of the top listed South African companies to ascertain what the level of disclosure of corporate governance was, with specific reference to the recommendations contained in the King Code. For the purposes of this study, the top companies were defined as the FTSE/JSE Top 40 Index companies. The supposition was that most companies, having been confronted with the King Code for almost six years, would be compliant to a large degree and will disclose their compliance. This was expected to be more evident amongst top companies who have the resources and influence to effect changes sooner and take the lead on high profile issues. The study confirmed the supposition that companies, at least in the sample, were highly compliant. There were however some areas where improvements can be made to be more in line with global best practices. / AFRIKAANSE OPSOMMING: Gedurende die periode van vernuwing in Suid-Afrika en die jaar van die eerste demokratiese verkiesing, 1994, het die eerste King verslag op korporatiewe bestuur verskyn. Vir die eerste keer het maatskappye in Suid-Afrika ‘n goeie verwysing gehad in die bepaling van hul korporatiewe bestuurspraktyke en gedrag. ‘n Tweede King verslag, alombekend as King II, het in Maart 2002 verskyn en op die eerste verslag uitgebou om ‘n kode te voorskyn te bring wat ten tyde van publisering as wêreldklas bestempel is. Bo en behalwe die aanvaarding en toepassing van King II in die korporatiewe bestuurspraktyk, het die JSE ook nakoming van die Kode as deel van die noterings vereistes ingesluit. Die King Kode opsigself is nie ‘n afdwingbare stel reëls nie, maar eerder riglyne wat maatskappy bystaan in die implementering van beginsels van goeie bestuur. In ‘n soortgelyke manier gee die JSE ook aan maatskappye die buigsaamheid om gevalle van nie-nakoming te regverdig en verdedig. Dit onderskryf die sogenaamde voldoen of verduidelik filosofie wat korporatiewe bestuur in Suid Afrika aan gehoor gee. Studies het gevind dat die vlak van korporatiewe bestuursgedrag in Suid-Afrika hoog is, veral vir ‘n ontluikende mark. Nakoming met korporatiewe bestuurgedragskodes en deursigtigheid gaan hand aan hand. In ‘n voldoen of verduidelik regime, waar die mark geag word om te reguleer, is openbaarmaking van korporatiewe bestuursgedrag van kardinale belang. Die doel van hierdie navorsingsprojek was om ‘n peiling te maak van die voorste Suid-Afrikaanse maatskappye om te bepaal wat die vlak van openbaarmaking in terme van korporatiewe bestuursgedrag was, met spesifieke verwysing na die King Kode. Vir die doeleindes van die studie is die voorste maatskappye gedefiniëer as die FTSE/JSE Top 40 Indeks. Die veronderstelling was dat meeste maatskappye, gegewe die feit dat die Kode al ses jaar in omgang is, tot ‘n groot mate aan die Kode sal voldoen en inligting rakende die voldoening openbaar maak. Dit is ook verwag dat dit veral die geval onder die voorste maatskappye sou wees aangesien hulle oor die hulpbronne en invloed beskik om veranderinge vroeër teweeg te bring en leierskap te neem met hoë profiel kwesssies. Die studie het die veronderstelling korrek bewys dat maatskappye, ten minste in die geval van die ingeslote groep, ‘n hoë vlak van voldoening en openbaarmaking ten toon stel. Daar is egter nogtans areas waar verbeterings gedoen kan word om meer in lyn met internasionale beste praktyke te kom.