PhD (Economics) / Department of Economics / This is the first study to investigate the impact of working capital management on the performance (profitability and value) of South African firms listed on the Johannesburg Securities Exchange (JSE) before, during and after the 2008/2009 global financial crisis. Richards and Laughlin’s (1980) Cash Conversion Cycle (CCC) theory was used as the theoretical framework for analysing and linking working capital management to firm performance. In addition, the study investigates how the separate working capital management components impact the performance of firms. The study used both accounting and market based secondary data obtained from I-Net Bridge/BFA McGregor database and the JSE for 75 firms for the 10 year period, 2003 to 2012. Panel data regression models were used in the analyses. The key findings from the study indicate the following. First, the average profitability (ROA) for the sample firms decreased from 27% (before the financial crisis) to 20.2% during the crisis period and increased to 25.9% after the financial crisis. Second, the average market capitalisation (firm value) decreased from R18.9 billion before the crisis to R16.3 billion during the crisis period, and thereafter increased to a high of R24.4 billion after the crisis. Third, the average firm’s CCC was 28.4 days before the crisis and decreased to 12.5 days during the crisis period and later increased to 16.2 days after the crisis. Fourth, and interestingly, of the four working capital management variables, only accounts receivable conversion period is significantly negatively related to profitability during the financial crisis. Fifth, the three firm-specific variables (size, financial leverage, and current assets to total assets ratio) have no significant relation with profitability during the crisis period. Sixth, the external variable, change in GDP growth rate, has a significant positive relation with profitability. This suggests firms perform better when the economy is booming and otherwise during economic downturns, which is consistent with economic theory. Finally, and perhaps the most important contribution is that the study found an inverted U-shape relationship between working capital management (proxied by cash conversion cycle) and firm value before the crisis. This implies that there exists an optimal level of investment in working capital for which the sampled firms’ value is maximized. At this point, costs and benefits are balanced. Thus corporate managers should aim to keep as close to the optimal level as possible and try to avoid any deviations from it that destroy firm value. On the contrary, the results have not established any such relationship between working capital management and profitability for any of the three financial crisis periods. Based on the findings, it is recommended that firm managers should aim at keeping as close to the optimal working capital level as possible and try to avoid any deviations from it that may destroy firm value. / NRF

Thesis (M.A. Commerce (Economics)) -- University of Limpopo, 2019 / South Africa had targeted the oil and gas sector for investment through the industrial action plan as a special economic zone. However, certain economic fundamentals might negate the anticipated sector financial development. This study investigate how economic risk exposure influence oil & gas sector stock market returns from 2007 to 2015 on a monthly basis. The four macroeconomic variables used to measure economic risk exposure are Brent crude oil prices, the USD/ZAR exchange rate, broad money supply and gold prices. The adopted techniques include the GARCH model to incorporate volatility, the Johansen cointegration and Granger causality techniques. The results of the study found that change in Brent crude oil prices and broad money supply had a positive and significant impact on changes in oil & gas sector stock returns. Changes in exchange rate and gold prices had a negative and significant impact on the sector returns. The long-run relationship established one cointegrating equation in the series. Only Brent crude oil prices indicated a bi-directional Granger causality on the sector returns. Based on the findings, it is recommended that government may use exchange rate as a policy tool to attract interest in the sector. Regarding money supply, the reserve bank should further preserve its effective regulatory infrastructure including the laws, regulations and standards towards the achievement and maintenance of a stable financial system. Portfolio managers, risk managers and investors should monitor the gold price to mitigate losses due to its strength as a safe haven asset.

MCom (Cost and Management Accounting) / Department of Accountancy / The relationship between a firm’s investment behaviour, financial constraints and the level of internally generated cash flows has been a subject of extensive discussion in finance literature. The discussion revolves around the effectiveness of investment cash flow sensitivity (ICFS) as a measure of financial constraints with contradicting conclusions. Empirical literature is also not in agreement about the best firm-specific proxy to distinguish firms into financially-constrained versus financially-unconstrained ones and the effect of the 2007 to 2009 global financial crisis on the ICFS of South African firms is still to be determined. There are very limited studies that have investigated ICFS in developing economies. This is important as institutional differences and capital market developments between developed and developing economies justify a separate study of South Africa as a developing economy. This study used data drawn from 131 Johannesburg Stock Exchange listed non-financial firms for the period 2003 to 2016 to establish the most suitable criterion for distinguishing firms into financially constrained versus unconstrained, to determine the effect of the 2007 to 2009 global financial crisis on the ICFS and to determine if ICFS is a good measure of financial constraints. The data for the 131 sampled firms was obtained from the financial statements on the IRESS database. The dataset was split into constrained versus unconstrained firms using three firm specific splitting variables: firm size, cash flow holding and dividends pay-out. The data was further split into panel 1 (2003 to 2006 covering the period before the global crisis); panel 2 (2006 to 2010 covering the period including the global financial crisis period) and panel 3 (2010 to 2016 covering the post global financial crisis period). The study utilised the system generalized moments method (GMM) regression model that yields consistent estimates even with unbalanced panel data sets and the Fixed Effects estimator. The models were both implemented on STATA 15 software. Samples split based on the dividend pay-out showed the highest ICFS for financially-constrained firms before, during and after the global financial crisis period. ICFS is highest during the period including the global financial crisis years compared to samples split using firm size and cash flow holding. The study concludes that dividends pay-out is the best criterion to distinguish firms into financially-constrained versus unconstrained; the global financial crisis constrained all firms; and that ICFS can be a good measure of financial constraints. The main limitation to the study was that it used a small sample size in relation to other international studies. / NRF

Abstracts in English, Afrikaans and Zulu / The advancement and development of the financial sector is fundamental for building an efficient economic system that enhances foreign and domestic investments. The aim of this study was to compare the relationship between the price performance of initial public offerings and macroeconomic indicators in the South African and the Nigerian economy. With the increase of IPO listing on both stock exchanges, it is of paramount importance that an analysis and examination of IPO performance and its contribution to the economy is conducted. Using the 91 and 19 initial public offerings that were listed on the Johannesburg Stock Exchange and the Nigerian Stock Exchange respectively during the years 2005 to 2015, price performance was measured by using the market-adjusted abnormal returns and the wealth relative model. The linear ordinary least squares regression model was used to measure the relationship between initial public offering performance and macroeconomic indicators. Based on the mean market adjusted returns, initial public offerings listed between 2005 and 2015 were under-priced. The regression model established that the first day, week and month price changes in Nigeria were 0.19, 0.48 and 0.77 times higher respectively than to South Africa. The regression analysis found that inflation and interest rates were positively correlated with price changes at the end of the first month of trade, whereas gross domestic product growth was not statistically significant. Therefore, to evade financial loss, investment decision making processes should consider factors such as geographic location, interest rates, inflation and the industry prior to making the decision. / Die bevordering en ontwikkeling van die finansiële sektor is fundamenteel vir die ontwikkeling van ʼn doeltreffende ekonomiese stelsel wat buitelandse en binnelandse investering aanmoedig. Die doel van hierdie studie was om die verhouding tussen die prysprestasie van aanvanklike openbare aanbiedinge en makro-ekonomiese aanwysers in die Suid-Afrikaanse en Nigeriese ekonomie te vergelyk. Met die toename in AOA-notering op albei aandelebeurse, is dit uiters belangrik dat ’n ontleding van en ondersoek na AOA-prestasie en sy bydrae tot die ekonomie uitgevoer word. Deur gebruikmaking van die 91 en 19 aanvanklike openbare aanbiedinge wat onderskeidelik op die Johannesburgse Effektebeurs en die Nigeriese Effektebeurs gedurende die tydperk 2005 tot 2015 genoteer is, is prysprestasie gemeet deur gebruikmaking van die markaangepaste abnormale opbrengste en die rykdomrelatiewe model. Die lineêre gewone kleinste kwadrate-regressiemodel is gebruik om die verwantskap tussen die prestasie van aanvanklike openbare aanbod en makro-ekonomiese aanwysers te meet. Op grond van die gemiddelde markaangepaste opbrengste was aanvanklike openbare aanbiedinge wat tussen 2005 en 2015 genoteer is, onderprys. Die regressiemodel het vasgestel dat die eerste dag-, week- en maandprysveranderinge in Nigerië onderskeidelik 0.19, 0.48 en 0.77 keer hoër as in Suid-Afrika was. Die regressieontleding het bevind dat inflasie en rentekoerse ’n positiewe korrelasie gehad het met prysveranderinge aan die einde van die eerste handelsmaand, terwyl bruto binnelandse produk se groei nie statisties beduidend was nie. Derhalwe, om finansiële verlies te ontduik, behoort investeringbesluitnemingsprosesse faktore soos geografiese ligging, rentekoerse, inflasie en die bedryf in aanmerking te neem voordat besluite geneem word. / Ukuqhubekela phambili kanye nentuthuko yomkhakha (sector) yezezimali kubalulekile ekwakheni inqubo yezomnotho esebenza kahle neqhubekela phambili ukutshalwa kwezimali zangaphandle kanye nezangaphakathi ezweni. Inhloso yalolu cwaningo bekuwukuqhathanisa ubuhlobo phakathi kokusebenza kwentengo yama-initial public offerings kanye nezinkomba zama-macroeconomic kumnotho weNingizimu Afrika kanye nowase-Nigeria. Ngokwenyuka kwe-IPO listing kuwo womabili ama-stock exchange, kubaluleke kakhulu ukuthi kwenziwe uhlaziyo nohlolo lokusebenza kwe-IPO kanye nomthelela wakho kumnotho kumele kwenziwe. Ngokusebenzisa ama-initial public offerings ka 91 no 19 kwi-Johannesburg Stock Exchange kanye nakwi-Nigerian Stock Exchange ngokuhambisana phakathi kweminyaka ka 2005 kanye no 2015, ukusebenza kwamanani entengo kwakalwa ngokusebenzisa ama-market-adjusted abnormal returns kanye ne-wealth relative model. Imodeli ye-linear ordinary least squares regression model kwasetshenziswa ukukala ubuhlobo phakathi kwama-initial public offering performance kanye nezinkomba ze-macroeconomic. Ngokulandela i-mean market-adjusted returns, ama-initial public offerings okwafakelwa kuhla phakathi kweminyaka ka 2005 kanye no 2015 kwakufakelwe ngentengo ephansi. I-regression model yathola ukuthi ngosuku lokuqala, ngeviki, kanye nenyanga, ukushintsha kwamanani entengo eNigeria, kwakungu 0.19, 0.48 kanye ne 0.77 ngezihlandla eziphezulu kuneNingizimu Afrika. Uhlaziyo lwe-regression analysis lwathola ukuthi i-infleshini kanye namazinga enzalo achaphazeleka ngendlela enhle ngokuhambisana noshintsho lwentengo ekupheleni kwenyanga yokuqala yokuhwebelana, lapho khona ukukhula kwe-gross domestic project kwakungakhulile kakhulu ngokwezibalo. Ngakho-ke, ukugwema ulahlekelo kwezezimali, izinqubo zokuthatha izinqumo ngotshalo-mali kumele kubonelele izinto ezifana nendawo okuyi-geographical location, amazinga enzalo, i-infleshini kanye nemboni ngaphambi kokuthatha isinqumo. / Finance, Risk Management and Banking / M. Com. (Business Management)