Thesis (MBA (Business Management))--Stellenbosch University, 2008. / ENGLISH ABSTRACT: Corporate governance presents the researcher and the theorist alike, with a rich vein of potential subject matter. This spans a massive scope of issues, ranging from feminist concerns to direct litigious anomalies during the multinational implementation of specific governance measures. Located towards the centre of this spectrum is the formulation of new governance policies, as informed by both theoretical foundations and real world experience. It is at this midway point that the South African governance debate currently finds itself, with the third edition of the King Report on Corporate Governance set for launch in the coming months. The report and the associated code will form the basis for all governance and related oversight mechanisms in South Africa for the foreseeable future. As such, the third report will have to organically grow out of the current structure, the lessons learnt from the current dispensation and the governing theoretical positions. All of these will also have to be done with reference to the new companies act. The research report is specifically targeted at assisting in the process of learning from the current dispensation, before it is replaced by the new. The learning process has as its central tool a formal questionnaire, which was developed and administered by the IOD and KPMG, with all analysis presented herein performed by the author of this research report. The analysis conducted aims to determine how respondents at different types of companies and in different functions, view corporate governance and specifically the current dispensation in South Africa. This is done by dividing respondents into 10 groupings and determining the percentage of respondents from each group, who responded in a certain manner to each question on the questionnaire. Thereafter a statistical analysis technique is employed to determine whether or not any differences found are meaningful and if so, what can be inferred from these differences. Finally, this study is intended to provide a baseline for future studies, which will then be in a position to more accurately measure shifts in attitude and implementation after the publication of the third King Report. / AFRIKAANSE OPSOMMING: Korporatiewe bestuur, hetsy van ‘n suiwer teoreties of ‘n toepassingsoogpunt, bied aan die navorser ‘n magdom van moontlike onderwerpe. Dit sluit bykans enige denkbare invalshoek of fokus area in, van die feminisme tot regskwessies rondom die multinasionale implementering van ‘n enkele kode of beginsel. Midde in hierdie wye veld is daar ook areas wat na beide die teoretiese en praktiese verwys, waarvan die ontwikkeling en opdatering van korporatiewe bestuurskodes ‘n sprekende voorbeeld is. Dit is dan juis ook op hierdie punt waar die debat rondom korporatiewe bestuur in Suid-Afrika sigself tans bevind, met die derde King Verslag op Korporatiewe Bestuur wat binne die volgende paar maande verwag word. Die belang van hierdie verslag lê daarin dat dit, asook die meegaande riglyne, die basis sal vorm van korporatiewe bestuur in Suid-Afrika vir die afsienbare toekoms. Om volwaardig in hierdie kapasiteit te kan funksioneer, sal die nuwe verslag organies moet groei uit die huidige verslag, ervaring in die praktyk en ook die heersende teoretiese posisies. Die ontwikkeling moet dan ook verder tred hou met die nuwe maatskappye wet, wat tans ontwikkel word. Die navorsingsverslag wat hierin voorgelê word, is daarop geteiken om uit die huidige sisteem, spesifiek die tweede King Verslag en meegaande riglyne, te leer alvorens dit vervang word deur die derde King verslag. Die taak is moontlik gemaak deur die gebruik van ‘n vraelys saamgestel en gesirkuleer deur die IOD en KPMG, alhoewel al die analise hier voorgelê deur die outeur van hierdie verslag gedoen is. Die genoemde analise se sentrale fokus is om te bepaal hoe respondente uit verskillende maatskappye en beroepe, korporatiewe bestuur in Suid-Afrika sien, met spesifieke verwysing na die tweede King verslag. Verskille tussen die respondente, wat in 10 groepe ingedeel is, is dan ook statisties geanaliseer om te bepaal of enige verskille tussen die groepe statisties beduidend is en indien wel, wat daaruit afgelei kan word. Laastens is die studie ook opgestel om ‘n basis daar te stel vir toekomstige vergelykende studies, wat sal volg na die uitreiking en implementering van die derde King verslag en riglyne.

Thesis (MBA)--University of Stellenbosch, 2010. / The introduction of King III has resulted in many changes to corporate governance practices. The changes inevitably have implications and challenges for organisations. If the changes introduced by King III as well as the implications and challenges are not well understood, implementing King III could be a very challenging exercise. This research report outlines the key differences between King III and King II. The research report also highlights the major implications and challenges of implementing the King III principles. In addition, those aspects of King III that are covered in the new Companies Act have also been outlined. In analysing the changes between King II and King III, and the implications and challenges of King III‟s principles and recommendations, the author followed the layout of the chapters in King III, namely ethical leadership and corporate citizenship, boards and directors, audit committees, the governance of risk, the governance of information technology, compliance with laws, codes, rules and standards, internal audit, governing stakeholder relationships and integrated reporting. The differences between King III and King II were analysed through a study and comparison of the King III and King II Reports. The implications and challenges were analysed through reading literature on King III and corporate governance in general. Aspects of King III covered in the Companies Act were analysed through a study of King III and the Companies Act. The author analysed the differences, implications and challenges of both the principles and the recommended practice in the King Reports. No distinction was made between principles and recommended practices. The main changes introduced by King III relate to the composition and role of the board, the board committees and the new topic on IT governance and the need to publish an integrated report. Though discussed in different chapters, King III has emphasised the link and interplay between ethics, corporate social responsibility, governing stakeholder relationships and integrated reporting. In addition to the above, the most contentious change is probably the applicability of King III to all entities regardless of form of incorporation. King III has also attempted to bring about a physiological change in the way companies perceive King III by changing the “comply or explain” concept to the “apply or explain concept”. The direct implications and challenges brought about by King III relate to the time, efforts and costs needed to implement the various King III principles and recommendations. King III could also result in an increase in the size or diversity of the board, and companies are likely to find it challenging to get qualified people to fill directorship posts. Integrated reporting is going to change the way companies view corporate social responsibility and the way they report non-financial information to stakeholders. Despite the challenges, there is no doubt that King III goes a long way to ensure that South Africa‟s corporate governance system is at par with the rest of the world.

The King II Report on Corporate Governance was released in March 2002. This report, although focusing on South African businesses, is acclaimed as a world first in setting superior governance standards. Corporate governance in South Africa is undergoing transformation due to the influence of the King II Report, and a range of other global trends such as Global Reporting Initiative guidelines and the infamous collapse of Enron due to governance failures. Non-financial reporting (also referred to as sustainability reporting) forms the main focus of this research project. The financial reporting aspects of corporate governance, and the role of governing boards and auditors fall outside the scope of this study. Through document analysis methods, Eskom's annual reports from 1998 - 2002, were analysed to establish whether patterns in sustainability reporting were identifiable. Employees and consumers of Eskom were. interviewed, using structured interviews to explore their awareness and knowledge regarding sustainability issues. A drastic increase in Eskom's non-financial reporting was identified in 2000. Apart from the corporate governance category, none of the chosen categories showed a major change after the 2002 release of the King II Report. Possible reasons for the lack of clear trends since 2002 are that the pattern is either not yet visible or it could be speculated that Eskom, who had won various reporting awards, is a leader in the field of corporate reporting and specifically on sustainability issues. Eskom had been involved in the reviewing of the first King Report and the drawing up of the recommendations for King II, and could therefore have modified their reporting procedures in 2000, prior'to the release of King II. As shown in the trend analysis, companies are coming under increased pressure to be socially accountable and transparent. This is fast becoming a 'core business issue', illustrated by the status of the King II Report requirements for corporate governance. Even though the terminology 'sustainability reporting' is unfamiliar to employees and consumers, both groups want disclosure and transparency of sustainability issues. Employees were, however, more aware than consumers of Eskom policies regarding sustainability issues. This report recommends that companies take a pro-active approach to corporate governance and sustainability reporting, noting the desire of consumers and employees to be informed about non-financial issues. These stakeholders also need to be made more aware of the meaning and significance of sustainability reporting.

The main objective of this thesis is to investigate corporate governance practices in South Africa listed companies. Specifically, the thesis strives to achieve the following objectives. First, it investigates the extent of compliance with the best corporate governance practices as recommended by the King Committee on Corporate Governance prior to and post 2002 in order to understand whether there is improvement in corporate practices. Second the thesis investigates whether compliance with the best corporate governance practices are related to ethnicity of board structures (in particular Board Chairman, Board Dominance and Chief Executive Officer/Managing Director) and other factors such as company characteristics, market and performance related variables. Third it investigates the views/opinions of key stakeholders [e.g. regulators, King Code Commissioners, companies and institutional investors] regarding the state of corporate governance in SA and its influence in the Southern African Development Community (SADC) region. The findings from regression results indicate that compliance with the King Code increased substantially between 2002 and 2008. The results also indicate that compliance is high for accounting and auditing and boards and directors issues and lowest for integrated sustainability reporting issues. The findings also indicate that ethnicity influences corporate compliance with best practice governance principles such as the King Code, as per prediction. Compliance was also found to be high for large firms, firms with multiple listings in other stock exchanges and firms audited by Big 4 audit firms. Finally, the findings from the views of key stakeholders indicate that the Code has indeed improved corporate governance standards in South Africa, is suitable for the country because of its consideration of local circumstances and influences corporate practice in the SADC region.

The main objective of this thesis is to investigate corporate governance practices in South Africa listed companies. Specifically, the thesis strives to achieve the following objectives. First, it investigates the extent of compliance with the best corporate governance practices as recommended by the King Committee on Corporate Governance prior to and post 2002 in order to understand whether there is improvement in corporate practices. Second the thesis investigates whether compliance with the best corporate governance practices are related to ethnicity of board structures (in particular Board Chairman, Board Dominance and Chief Executive Officer/Managing Director) and other factors such as company characteristics, market and performance related variables. Third it investigates the views/opinions of key stakeholders [e.g. regulators, King Code Commissioners, companies and institutional investors] regarding the state of corporate governance in SA and its influence in the Southern African Development Community (SADC) region. The findings from regression results indicate that compliance with the King Code increased substantially between 2002 and 2008. The results also indicate that compliance is high for accounting and auditing and boards and directors issues and lowest for integrated sustainability reporting issues. The findings also indicate that ethnicity influences corporate compliance with best practice governance principles such as the King Code, as per prediction. Compliance was also found to be high for large firms, firms with multiple listings in other stock exchanges and firms audited by Big 4 audit firms. Finally, the findings from the views of key stakeholders indicate that the Code has indeed improved corporate governance standards in South Africa, is suitable for the country because of its consideration of local circumstances and influences corporate practice in the SADC region.

Thesis (MBA (Business Management))--University of Stellenbosch, 2007. / ENGLISH ABSTRACT: Corporate governance in South Africa was institutionalised by the publication of the King Report on Corporate Governance in 1994. The King Reports were set up to ensure transparency and accountability within companies. The second King Report on corporate governance for South Africa was released in 2002 and compliance with certain aspects of the report made compulsory as a listing requirement for companies trading on the Johannesburg Stock Exchange in 2003. These requirements adopt an approach of comply or explain, and companies have to report on whether they comply with the recommendations of the second King report, or have to explain the reason for such non-compliance. In 2004 the Johannesburg Stock Exchange launched the SRI Index with the aim to facilitate investment in such companies that have adopted the triple bottom line approach to reporting. The Global Reporting Initiative (GRI) develops and disseminates globally applicable sustainability reporting guidelines which provide a framework for reporting on an organisation’s economic, environmental, and social performance. The first draft guidelines of the GRI were released in 1999 and updated in 2002. The third generation (3G) of the reporting guidelines were released in October 2006. The focus of this research project was to conduct a survey on all companies that are listed on the Johannesburg Stock Exchange All Share Index as well as the companies listed on the JSE SRI Index, with the aim of giving some insight into the development of corporate governance and sustainability reporting applied by South African companies. The findings of the 2006 study were compared to the findings of a similar study on compliance on integrated sustainability reporting done in 2004, and trends were identified, analysed and discussed. Specific focus was placed on the reporting on issues of climate change, biodiversity and compliance with applicable sector charters. The 2006 survey established that overall reporting on sustainability and governance issues has improved, that companies are publishing additional detail on the implementation of BEE and transformation policies and that corporate governance and ethical compliance have been entrenched in the companies’ corporate culture. Environmental management is the matter that was least reported on. / AFRIKAANSE OPSOMMING: Korporatiewe bestuur in Suid Afrika was geinstitusionaliseer deur die publikasie van die King Verslag oor Korporatiewe Bestuur in 1994. Die King Verslag was ontwikkel om deursigtigheid en aanspreeklikheid in maatskappye te verseker. Die tweede Verslag oor Korporatiewe Bestuur in Suid Afrika was vrygestel in 2002 met sekere aspekte van die verslag wat verpligtend is as ’n maatskappy wil noteer op die Johannesburgse Effektebeurs. Die verslag vereis van maatskappye om ’n standpunt in te neem van voldoening of verduideliking. Die maatskappy moet ’n verslag inlewer om redes te verskaf hoekom hulle voldoen aan die regulasies, of verduidelik hoekom hulle nie aan die regulasies van die tweede King Verslag voldoen het nie. In 2004 het die Johannesburgse Effektebeurs die SRI Indeks bekend gestel met die doel van fasilitasie vir beleggings in maatskappye wat die ’triple bottom line’ standpunt aanwend. Die ’Global Reporting Initiative’ ontwikkel en versprei globale riglyne vir ’triple bottom line’ verslagdoening – dit verskaf 'n raamwerk vir verslagdoening van ’n organisasie se ekonomiese, omgewings en sosiale optrede. Die eerste stel riglyne is vrygestel in 1999 en aangepas in 2002. Die derde generasie van die riglyne is vrygestel in Oktober 2006. Die fokus van die navorsing was alle maatskappye wat op die JSE All Share Indeks geregistreer is asook die maatskappye wat deel vorm van die JSE SRI Indeks, met die doel om insig te gee in die ontwikkeling van korporatiewe maatreëls en verslagdoening wat toegepas word deur Suid Afrikaanse maatskappye. Die resultate van die 2006 studie is vergelyk met resultate van ’n soortgelyke studie in 2004. Spesifieke fokus was geplaas op verslagdoening oor sake met betrekking tot klimaatsverandering, biodiversiteit en voldoening met toepaslike sektor verslae. Die 2006 ondersoek het bevind dat algehele verslagdoening verbeter het; dat maatskappye verdere inligting beskikbaar stel oor die implementasie van swart ekonomiese bemagtiging, transformasie beleid en korporatiewe bestuur; en dat etiese voldoening ge-integreer was in die maatskapy se korporatiewe kultuur.