Orientation: The study explores credit management on the South African higher education landscape... more Orientation: The study explores credit management on the South African higher education landscape in the context of the institutional theory.Research purpose: To calculate a best practice frontier to assess the extent to which universities’ credit management policy as an institutional resource is appropriate for its environment.Motivation for the study: The study was undertaken to investigate how the institutional environment influences the development of formal university structures.Research design, approach and method: A parallel mixed-method research design was followed to collect both qualitative data and quantitative data: document analysis to assess five universities of technology’s credit management policies and quantitative data testing 1392 senior students’ perspectives on the credit management policies of these five universities of technology.Main findings: The lesson learnt from this study is that the more aggressive the credit management policy, the more the students rat...
This study challenges the fairness of sectional title schemes’ levies that are ordered by the Sec... more This study challenges the fairness of sectional title schemes’ levies that are ordered by the Sectional Title Act (95 of 1986) to be allocated according to the participation quota (floor area) of units. Studies have shown that larger units in a sectional title scheme tend to subsidise the levies of smaller units. A log-transformed linear regression analysis was performed to investigate the cost behaviour of 113 sectional title schemes. The results revealed that 86% of the variation in the operating costs of a scheme is attributable to the variation in the area of a scheme, while 87% of the variation in operating costs is attributable to a variation in the number of units in a scheme. The conclusion is that the area and the number of units in a scheme are equally significant drivers of operating costs. Therefore, the study recommended that the levies should be allocated on a 50/50 basis with regard to area and number of units.
The purpose of this study is to determine the relationship between bank efficiency estimates, mea... more The purpose of this study is to determine the relationship between bank efficiency estimates, measured by Data Envelopment Analysis (DEA), and bank performance, measured by the financial ratios included in the Du Pont analysis. Annual financial statement reports were used to calculate the performance of listed banks on the JSE Limited over a ten-year period. This study is the first to use two unique DEA models: one focuses on the efficiency of the finance and investment activity, and the other on the efficiency of the operating activity of banks. The study found that the majority of significant relationships between efficiency estimates and financial ratios are negatively correlated. Further research is needed to explain this phenomenon. The practical implication of this study is that it indicates that an improvement in the DEA efficiency estimates will not necessarily result in better financial ratios. Therefore, both measurements should be used to evaluate different aspects of per...
The purpose of the study was to estimate the relative efficiency of different sizes of residentia... more The purpose of the study was to estimate the relative efficiency of different sizes of residential Sectional Title Development Schemes (STDSs) in order to minimise operating costs. Since area (m2) and the number of units in an STDS were found to be equally important drivers of operating costs, data envelopment analysis was used to estimate the efficiencies of a sample of 113 STDSs where the two measures of size were used as output variables and six categories of operating costs were used as input variables. It is evident that smaller STDSs tend to be more efficient in minimising operating costs than larger STDSs. Furthermore, it is also evident that economies of scale generally do not exist. The main limitation was that the role of a categorised scale of basic housing (lower market) or the scale of luxurious housing (upper market) was not considered.
The first objective of the study is to empirically test a number of company size determinants’ si... more The first objective of the study is to empirically test a number of company size determinants’ significance as size proxies in benchmarking CEO remuneration for different sectors of Johannesburg Stock Exchange (JSE)-listed companies. The second objective is to investigate an issue that has not been examined in previous studies, namely the extent to which companies are able to linearly scale their CEO remuneration and company size without changing the remuneration-to-size ratio. To fulfil the first objective, data extracted from the McGregor BFA database were obtained for 2013, where 244 companies in four sectors, i.e. financial, manufacturing, minerals and services, are analysed using descriptive statistics and simple regression analysis. From the results obtained, to fulfil the second objective, a data envelopment analysis (DEA) model is built to estimate the technical and scale efficiencies of 231 companies. A hypothesis test was helpful to find that the following determinants can...
South African Journal of Accounting Research, 2011
The purpose of the study is to determine the relationship between environmental performance and e... more The purpose of the study is to determine the relationship between environmental performance and economic performance in the South African mining industry, where the economic performance consists of market-based and accounting-based estimates. In this regard, Spearman’s ranking-order correlation was applied. The study found that there is some contradiction in the direction of the relationship between accounting-based estimates and market-based estimates and their relationship with environmental performance. Furthermore, there is some contradiction in the direction of the relationship between economic performance and the environmental performance of the different mining sectors. The main limitation is that only a limited number of mining companies reported on environmental-related issues. Only ten mining companies provided sufficient annual data over a five-year period. The contribution of this study is that it pointed out that causation can be argued both ways between environmental performance and economic performance. When a change in the environmental performance influences the economic performance, it can be determined whether it does/does not pay to be green. This one-sided view, used in previous studies, presents probably only half of the bigger picture.
International Business & Economics Research Journal (IBER), 2011
The purpose of the study is to develop a data envelopment analysis (DEA) model to estimate the re... more The purpose of the study is to develop a data envelopment analysis (DEA) model to estimate the relative scale efficiency of platinum-mining companies environmental performance. South African platinum-mines were used to demonstrate the model, which uses environmental performance indicators as the input variables in order to generate mineral extraction and financial performances as the output variables. The input variables considered were greenhouse gas emissions, water usage and energy usage, while the output variables were platinum production, return on equity and return on assets. The contribution of the study is that a DEA model was developed that could identify relatively efficient companies that could act as benchmarks with regard to environmental issues in the mining sector. A further contribution is that the study concluded that platinum-mining companies tend not to achieve economies of scale, where the companies that are relatively larger in size tend to operate on a scale th...
International Business & Economics Research Journal (IBER), 2012
The purpose of the study is to empirically compare CEO compensation benchmarks set by the frequen... more The purpose of the study is to empirically compare CEO compensation benchmarks set by the frequently used Linear Regression Analysis (LRA), which is based on averages and Data Envelopment Analysis (DEA), which is based on best practices. To fulfill this purpose, an empirical investigation on South African listed companies was executed using a sample of 187 Johannesburg Stock Exchange (JSE) companies, grouped into three categories according to their sizes by using total assets, i.e. large, medium and small companies. For the LRA model, total CEO compensation is the dependent variable (y) with return on equity (as a measurement of performance) and total assets (as measurement of company size) as the independent variables (x). In the LRA model, the expected CEO compensation was calculated as a benchmark for each company and then compared to the actual value of the CEO compensation. In the DEA model, total CEO compensation is the input variable and return on equity and total assets the ...
Porter’s generic business strategies of cost leadership and differentiation were adjusted to make... more Porter’s generic business strategies of cost leadership and differentiation were adjusted to make them applicable to CEO compensation strategies. The cost leadership strategy equates to a firm that attempts to signal that their CEO is not over paid, not reaping off much of the profits, but is compensated according to best practices. The differentiation strategy relates to a firm that believes it is important to signal that their CEO is above average and therefore should earn an above average compensation. The purpose of the study was to develop a data envelopment analysis (DEA) model with two stages. The first provides a best practice frontier to benchmark segments of CEO compensation against determiners thereof, including firm-, CEO- and governance characteristics. Firms with different strategies will then position themselves differently to the best practice frontier. Irrespective of the strategy chosen at the first stage, the second stage estimates how efficient firms are to conve...
Risk Governance and Control: Financial Markets & Institutions, 2016
The purpose of this study is to investigate empirically whether there is a positive correlation b... more The purpose of this study is to investigate empirically whether there is a positive correlation between debt levels and total shareholder return (TSR) of platinum JSE-listed companies. The study field comprised annual analyses for 12 companies listed under the Platinum and Precious Metals sector on the JSE Ltd for the 14-year period 2000 to 2013. The results of the study were inconclusive as a statistically significant positive correlation between changes in debt levels and changes in TSR could only be found in two of these years. The core audience of the study will be the management of South African platinum companies considering changes in their capital structure, and investors considering investment in a listed platinum company. The contribution of the study is therefore to add to the body of literature on capital structure decisions from a South African platinum mine context.
South African Journal of Accounting Research, 2009
This study used monthly balance sheet data, annual financial statement reports as well as other r... more This study used monthly balance sheet data, annual financial statement reports as well as other relevant data to calculate the technical and scale efficiency estimates (determined by Data Envelopment Analysis (DEA)) as well as the performance measurement of economic value added (EVA) for three of the major banks in South Africa. The main purpose of the study was to determine, by means of multiple regression analysis, whether changes in the efficiency estimates lead to changes in the EVAs of the banks. This study found that the overall regression model is statistically significant for only one of the three banks.
South African Journal of Economic and Management Sciences, 2012
The purpose of the study is firstly to use Data Envelopment Analysis (DEA) to aggregate the overa... more The purpose of the study is firstly to use Data Envelopment Analysis (DEA) to aggregate the overall performance (technical efficiency) of firms to convert scarce resources into outputs that create wealth for shareholders, and secondly, to determine the degree to which this mentioned performance is reflected in a number of profitability and market value ratios. Annual financial statement data were used for 55 manufacturing companies listed on the JSE Limited over a five-year period in a cross-sectional analysis. The study found that return on equity has the most significant relationship with technical efficiency, followed by return on assets. The market value ratios price/earnings and dividend yield have no significant relationship with technical efficiency. The value of this study is that it is the first of its kind where technical efficiency, which aggregated operating, profitability and marketability efficiencies, is used to determine the relative importance of not only the readil...
South African Journal of Accounting Research, 2016
The purpose of the study was to construct two similar data envelopment analysis (DEA) models. The... more The purpose of the study was to construct two similar data envelopment analysis (DEA) models. The first contains only published accounting-based data and the second added weighted average cost of capital (WACC), a primary market-based determinant, as an input variable. The efficiency scores of firms according to the two models are compared to determine whether there is a significant difference between the two models’ results. In total, 206 company years were analysed. This includes all the manufacturing firms which published financial statements on the Johannesburg Security Exchange (JSE) from 2011 to 2013. The study found that there is a good chance that the efficiency score of a firm will be significantly lower when WACC is added as a variable. Therefore, ignoring WACC in a general benchmarking DEA model may provide a misleading, too optimistic, sugar-coated answer to firms’ managers with regard to their firms’ relative operating efficiency. The study contributes to the existing body of literature by revealing evidence that WACC is an important component in a DEA model that aims to benchmark firms’ operating efficiency. Therefore, accounting-based data should be used in conjunction with WACC, a primary market-based determinant, which adds a further dimension to the benchmarking model.
Orientation: The study explores credit management on the South African higher education landscape... more Orientation: The study explores credit management on the South African higher education landscape in the context of the institutional theory.Research purpose: To calculate a best practice frontier to assess the extent to which universities’ credit management policy as an institutional resource is appropriate for its environment.Motivation for the study: The study was undertaken to investigate how the institutional environment influences the development of formal university structures.Research design, approach and method: A parallel mixed-method research design was followed to collect both qualitative data and quantitative data: document analysis to assess five universities of technology’s credit management policies and quantitative data testing 1392 senior students’ perspectives on the credit management policies of these five universities of technology.Main findings: The lesson learnt from this study is that the more aggressive the credit management policy, the more the students rat...
This study challenges the fairness of sectional title schemes’ levies that are ordered by the Sec... more This study challenges the fairness of sectional title schemes’ levies that are ordered by the Sectional Title Act (95 of 1986) to be allocated according to the participation quota (floor area) of units. Studies have shown that larger units in a sectional title scheme tend to subsidise the levies of smaller units. A log-transformed linear regression analysis was performed to investigate the cost behaviour of 113 sectional title schemes. The results revealed that 86% of the variation in the operating costs of a scheme is attributable to the variation in the area of a scheme, while 87% of the variation in operating costs is attributable to a variation in the number of units in a scheme. The conclusion is that the area and the number of units in a scheme are equally significant drivers of operating costs. Therefore, the study recommended that the levies should be allocated on a 50/50 basis with regard to area and number of units.
The purpose of this study is to determine the relationship between bank efficiency estimates, mea... more The purpose of this study is to determine the relationship between bank efficiency estimates, measured by Data Envelopment Analysis (DEA), and bank performance, measured by the financial ratios included in the Du Pont analysis. Annual financial statement reports were used to calculate the performance of listed banks on the JSE Limited over a ten-year period. This study is the first to use two unique DEA models: one focuses on the efficiency of the finance and investment activity, and the other on the efficiency of the operating activity of banks. The study found that the majority of significant relationships between efficiency estimates and financial ratios are negatively correlated. Further research is needed to explain this phenomenon. The practical implication of this study is that it indicates that an improvement in the DEA efficiency estimates will not necessarily result in better financial ratios. Therefore, both measurements should be used to evaluate different aspects of per...
The purpose of the study was to estimate the relative efficiency of different sizes of residentia... more The purpose of the study was to estimate the relative efficiency of different sizes of residential Sectional Title Development Schemes (STDSs) in order to minimise operating costs. Since area (m2) and the number of units in an STDS were found to be equally important drivers of operating costs, data envelopment analysis was used to estimate the efficiencies of a sample of 113 STDSs where the two measures of size were used as output variables and six categories of operating costs were used as input variables. It is evident that smaller STDSs tend to be more efficient in minimising operating costs than larger STDSs. Furthermore, it is also evident that economies of scale generally do not exist. The main limitation was that the role of a categorised scale of basic housing (lower market) or the scale of luxurious housing (upper market) was not considered.
The first objective of the study is to empirically test a number of company size determinants’ si... more The first objective of the study is to empirically test a number of company size determinants’ significance as size proxies in benchmarking CEO remuneration for different sectors of Johannesburg Stock Exchange (JSE)-listed companies. The second objective is to investigate an issue that has not been examined in previous studies, namely the extent to which companies are able to linearly scale their CEO remuneration and company size without changing the remuneration-to-size ratio. To fulfil the first objective, data extracted from the McGregor BFA database were obtained for 2013, where 244 companies in four sectors, i.e. financial, manufacturing, minerals and services, are analysed using descriptive statistics and simple regression analysis. From the results obtained, to fulfil the second objective, a data envelopment analysis (DEA) model is built to estimate the technical and scale efficiencies of 231 companies. A hypothesis test was helpful to find that the following determinants can...
South African Journal of Accounting Research, 2011
The purpose of the study is to determine the relationship between environmental performance and e... more The purpose of the study is to determine the relationship between environmental performance and economic performance in the South African mining industry, where the economic performance consists of market-based and accounting-based estimates. In this regard, Spearman’s ranking-order correlation was applied. The study found that there is some contradiction in the direction of the relationship between accounting-based estimates and market-based estimates and their relationship with environmental performance. Furthermore, there is some contradiction in the direction of the relationship between economic performance and the environmental performance of the different mining sectors. The main limitation is that only a limited number of mining companies reported on environmental-related issues. Only ten mining companies provided sufficient annual data over a five-year period. The contribution of this study is that it pointed out that causation can be argued both ways between environmental performance and economic performance. When a change in the environmental performance influences the economic performance, it can be determined whether it does/does not pay to be green. This one-sided view, used in previous studies, presents probably only half of the bigger picture.
International Business & Economics Research Journal (IBER), 2011
The purpose of the study is to develop a data envelopment analysis (DEA) model to estimate the re... more The purpose of the study is to develop a data envelopment analysis (DEA) model to estimate the relative scale efficiency of platinum-mining companies environmental performance. South African platinum-mines were used to demonstrate the model, which uses environmental performance indicators as the input variables in order to generate mineral extraction and financial performances as the output variables. The input variables considered were greenhouse gas emissions, water usage and energy usage, while the output variables were platinum production, return on equity and return on assets. The contribution of the study is that a DEA model was developed that could identify relatively efficient companies that could act as benchmarks with regard to environmental issues in the mining sector. A further contribution is that the study concluded that platinum-mining companies tend not to achieve economies of scale, where the companies that are relatively larger in size tend to operate on a scale th...
International Business & Economics Research Journal (IBER), 2012
The purpose of the study is to empirically compare CEO compensation benchmarks set by the frequen... more The purpose of the study is to empirically compare CEO compensation benchmarks set by the frequently used Linear Regression Analysis (LRA), which is based on averages and Data Envelopment Analysis (DEA), which is based on best practices. To fulfill this purpose, an empirical investigation on South African listed companies was executed using a sample of 187 Johannesburg Stock Exchange (JSE) companies, grouped into three categories according to their sizes by using total assets, i.e. large, medium and small companies. For the LRA model, total CEO compensation is the dependent variable (y) with return on equity (as a measurement of performance) and total assets (as measurement of company size) as the independent variables (x). In the LRA model, the expected CEO compensation was calculated as a benchmark for each company and then compared to the actual value of the CEO compensation. In the DEA model, total CEO compensation is the input variable and return on equity and total assets the ...
Porter’s generic business strategies of cost leadership and differentiation were adjusted to make... more Porter’s generic business strategies of cost leadership and differentiation were adjusted to make them applicable to CEO compensation strategies. The cost leadership strategy equates to a firm that attempts to signal that their CEO is not over paid, not reaping off much of the profits, but is compensated according to best practices. The differentiation strategy relates to a firm that believes it is important to signal that their CEO is above average and therefore should earn an above average compensation. The purpose of the study was to develop a data envelopment analysis (DEA) model with two stages. The first provides a best practice frontier to benchmark segments of CEO compensation against determiners thereof, including firm-, CEO- and governance characteristics. Firms with different strategies will then position themselves differently to the best practice frontier. Irrespective of the strategy chosen at the first stage, the second stage estimates how efficient firms are to conve...
Risk Governance and Control: Financial Markets & Institutions, 2016
The purpose of this study is to investigate empirically whether there is a positive correlation b... more The purpose of this study is to investigate empirically whether there is a positive correlation between debt levels and total shareholder return (TSR) of platinum JSE-listed companies. The study field comprised annual analyses for 12 companies listed under the Platinum and Precious Metals sector on the JSE Ltd for the 14-year period 2000 to 2013. The results of the study were inconclusive as a statistically significant positive correlation between changes in debt levels and changes in TSR could only be found in two of these years. The core audience of the study will be the management of South African platinum companies considering changes in their capital structure, and investors considering investment in a listed platinum company. The contribution of the study is therefore to add to the body of literature on capital structure decisions from a South African platinum mine context.
South African Journal of Accounting Research, 2009
This study used monthly balance sheet data, annual financial statement reports as well as other r... more This study used monthly balance sheet data, annual financial statement reports as well as other relevant data to calculate the technical and scale efficiency estimates (determined by Data Envelopment Analysis (DEA)) as well as the performance measurement of economic value added (EVA) for three of the major banks in South Africa. The main purpose of the study was to determine, by means of multiple regression analysis, whether changes in the efficiency estimates lead to changes in the EVAs of the banks. This study found that the overall regression model is statistically significant for only one of the three banks.
South African Journal of Economic and Management Sciences, 2012
The purpose of the study is firstly to use Data Envelopment Analysis (DEA) to aggregate the overa... more The purpose of the study is firstly to use Data Envelopment Analysis (DEA) to aggregate the overall performance (technical efficiency) of firms to convert scarce resources into outputs that create wealth for shareholders, and secondly, to determine the degree to which this mentioned performance is reflected in a number of profitability and market value ratios. Annual financial statement data were used for 55 manufacturing companies listed on the JSE Limited over a five-year period in a cross-sectional analysis. The study found that return on equity has the most significant relationship with technical efficiency, followed by return on assets. The market value ratios price/earnings and dividend yield have no significant relationship with technical efficiency. The value of this study is that it is the first of its kind where technical efficiency, which aggregated operating, profitability and marketability efficiencies, is used to determine the relative importance of not only the readil...
South African Journal of Accounting Research, 2016
The purpose of the study was to construct two similar data envelopment analysis (DEA) models. The... more The purpose of the study was to construct two similar data envelopment analysis (DEA) models. The first contains only published accounting-based data and the second added weighted average cost of capital (WACC), a primary market-based determinant, as an input variable. The efficiency scores of firms according to the two models are compared to determine whether there is a significant difference between the two models’ results. In total, 206 company years were analysed. This includes all the manufacturing firms which published financial statements on the Johannesburg Security Exchange (JSE) from 2011 to 2013. The study found that there is a good chance that the efficiency score of a firm will be significantly lower when WACC is added as a variable. Therefore, ignoring WACC in a general benchmarking DEA model may provide a misleading, too optimistic, sugar-coated answer to firms’ managers with regard to their firms’ relative operating efficiency. The study contributes to the existing body of literature by revealing evidence that WACC is an important component in a DEA model that aims to benchmark firms’ operating efficiency. Therefore, accounting-based data should be used in conjunction with WACC, a primary market-based determinant, which adds a further dimension to the benchmarking model.
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Papers by Merwe Oberholzer