Pub Date : 2018-09-02DOI: 10.1080/10291954.2018.1514141
G. Willows, J. Rockey
This study analyses whether significant cumulative average abnormal returns (CAAR) are observed before and after the release of financial results and integrated reports. The study was completed through the use of event study methodology, based on the capital asset pricing model for the top 40 companies listed on the Johannesburg Stock Exchange, over the period from 2012 to 2015. The study finds evidence of statistically significant CAAR. Furthermore, there appears to be stronger market reaction to the release of financial results than integrated reports. The resulting conclusion highlights the lagging trend of share price movements in relation to financial statement releases, while clarifying the lack of any noticeable reaction to the release of integrated reports. The study provides insight into market reaction and, given the increased research on the value of the integrated report, creates an awareness that is important for application of accounting practice.
{"title":"Share price reaction to financial and integrated reports","authors":"G. Willows, J. Rockey","doi":"10.1080/10291954.2018.1514141","DOIUrl":"https://doi.org/10.1080/10291954.2018.1514141","url":null,"abstract":"This study analyses whether significant cumulative average abnormal returns (CAAR) are observed before and after the release of financial results and integrated reports. The study was completed through the use of event study methodology, based on the capital asset pricing model for the top 40 companies listed on the Johannesburg Stock Exchange, over the period from 2012 to 2015. The study finds evidence of statistically significant CAAR. Furthermore, there appears to be stronger market reaction to the release of financial results than integrated reports. The resulting conclusion highlights the lagging trend of share price movements in relation to financial statement releases, while clarifying the lack of any noticeable reaction to the release of integrated reports. The study provides insight into market reaction and, given the increased research on the value of the integrated report, creates an awareness that is important for application of accounting practice.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"174 - 188"},"PeriodicalIF":1.1,"publicationDate":"2018-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2018.1514141","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45197083","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-02DOI: 10.1080/10291954.2018.1537158
Stephan Spies, L. van Heerden
Action 7 of the BEPS action plan identified a multinational tax planning strategy that typically avoids corporate tax in the consumer country by preventing the creation of a Permanent Establishment (PE) therein. This is especially relevant in South Africa’s online retail industry on the basis that the taxability of non-resident online retailers depends on the existence of a South African PE, as defined. In response to the use of tax planning structures that avoid the creation of a PE, Action 7 proposed certain amendments to the PE definition. This article investigated to what extent, if any, the proposed solutions in Action 7 could impact the definition of a PE and, consequently, the taxability of non-resident online retailers in South Africa. A literature review of publications on Action 7 was undertaken and applied to a South African case study to meet the stated objective. It was established that the applicability and impact of the amendments are case specific and depend, inter alia, on South Africa’s position on the OECD’s multilateral instrument. Should the amendments apply, the South African warehouse of a non-resident online retailer may, depending on the facts, create a PE and resulting tax liability for an enterprise that previously avoided corporate tax in South Africa.
{"title":"Action 7 of the BEPS action plan and the permanent establishment status of non-resident online retailers in South Africa","authors":"Stephan Spies, L. van Heerden","doi":"10.1080/10291954.2018.1537158","DOIUrl":"https://doi.org/10.1080/10291954.2018.1537158","url":null,"abstract":"Action 7 of the BEPS action plan identified a multinational tax planning strategy that typically avoids corporate tax in the consumer country by preventing the creation of a Permanent Establishment (PE) therein. This is especially relevant in South Africa’s online retail industry on the basis that the taxability of non-resident online retailers depends on the existence of a South African PE, as defined. In response to the use of tax planning structures that avoid the creation of a PE, Action 7 proposed certain amendments to the PE definition. This article investigated to what extent, if any, the proposed solutions in Action 7 could impact the definition of a PE and, consequently, the taxability of non-resident online retailers in South Africa. A literature review of publications on Action 7 was undertaken and applied to a South African case study to meet the stated objective. It was established that the applicability and impact of the amendments are case specific and depend, inter alia, on South Africa’s position on the OECD’s multilateral instrument. Should the amendments apply, the South African warehouse of a non-resident online retailer may, depending on the facts, create a PE and resulting tax liability for an enterprise that previously avoided corporate tax in South Africa.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"225 - 245"},"PeriodicalIF":1.1,"publicationDate":"2018-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2018.1537158","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46647845","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-02DOI: 10.1080/10291954.2018.1514140
E. Swanepoel
The paper focuses on the quality of audits in small and medium practices (SMPs) when these audits are performed according to the freely available guidelines published by various regulatory bodies. Audit sampling is highlighted as a key component of audit quality in several reports of regulatory bodies’ inspection findings. A sampling methodology frequently used by SMPs is monetary unit sampling (MUS) in combination with either MUS or ratio projection. The effectiveness of this approach is investigated in terms of four criteria defined in the paper. Simulation was used for this purpose. Different scenarios were obtained by varying sample size, number of tainted items in the population and the total error amount. An actual revenue database was used as a point of departure. The study shows that simply following the proposed sampling guideline, can easily lead to sub-optimal use of resources. A more considered approach may alleviate this problem.
{"title":"The effectiveness of audit sampling methods recommended to small and medium practices in guides published by audit regulators","authors":"E. Swanepoel","doi":"10.1080/10291954.2018.1514140","DOIUrl":"https://doi.org/10.1080/10291954.2018.1514140","url":null,"abstract":"The paper focuses on the quality of audits in small and medium practices (SMPs) when these audits are performed according to the freely available guidelines published by various regulatory bodies. Audit sampling is highlighted as a key component of audit quality in several reports of regulatory bodies’ inspection findings. A sampling methodology frequently used by SMPs is monetary unit sampling (MUS) in combination with either MUS or ratio projection. The effectiveness of this approach is investigated in terms of four criteria defined in the paper. Simulation was used for this purpose. Different scenarios were obtained by varying sample size, number of tainted items in the population and the total error amount. An actual revenue database was used as a point of departure. The study shows that simply following the proposed sampling guideline, can easily lead to sub-optimal use of resources. A more considered approach may alleviate this problem.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"109 - 131"},"PeriodicalIF":1.1,"publicationDate":"2018-09-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2018.1514140","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45011936","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-08-16DOI: 10.1080/10291954.2018.1505265
Gerhard Nienaber, Barend Barnard
Carbon dioxide (CO2) emissions and the resultant negative effects thereof on the environment due to climate change remain a global challenge. In South Africa, passenger vehicles contribute significantly to the amount of CO2 that is emitted into the atmosphere. In an effort to address this challenge, South Africa introduced a CO2 emissions tax from 1 September 2010. The aim of this tax is to make the vehicles on South Africa’s roads more environmentally friendly by influencing consumer behaviour at the point of a new car purchase. This paper considers the effect of this tax by way of a survey that targeted consumers who have bought a new passenger vehicle since the implementation of the tax. The paper aimed to measure consumers’ awareness of and insight into this CO2 emissions tax, as well as to determine whether the CO2 emissions tax influenced their purchasing decision. The results of this survey indicate that most consumers are not aware of the CO2 emissions tax. There is thus evidence to substantiate that the CO2 emissions tax has not achieved its purpose of making South Africa’s fleet of motor vehicles more environmentally friendly by changing consumers’ behaviour through influencing the purchase decision relating to new car sales.
{"title":"The effect of passenger vehicle CO2 emissions tax on consumer behaviour relating to new car purchase decisions","authors":"Gerhard Nienaber, Barend Barnard","doi":"10.1080/10291954.2018.1505265","DOIUrl":"https://doi.org/10.1080/10291954.2018.1505265","url":null,"abstract":"Carbon dioxide (CO2) emissions and the resultant negative effects thereof on the environment due to climate change remain a global challenge. In South Africa, passenger vehicles contribute significantly to the amount of CO2 that is emitted into the atmosphere. In an effort to address this challenge, South Africa introduced a CO2 emissions tax from 1 September 2010. The aim of this tax is to make the vehicles on South Africa’s roads more environmentally friendly by influencing consumer behaviour at the point of a new car purchase. This paper considers the effect of this tax by way of a survey that targeted consumers who have bought a new passenger vehicle since the implementation of the tax. The paper aimed to measure consumers’ awareness of and insight into this CO2 emissions tax, as well as to determine whether the CO2 emissions tax influenced their purchasing decision. The results of this survey indicate that most consumers are not aware of the CO2 emissions tax. There is thus evidence to substantiate that the CO2 emissions tax has not achieved its purpose of making South Africa’s fleet of motor vehicles more environmentally friendly by changing consumers’ behaviour through influencing the purchase decision relating to new car sales.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"132 - 153"},"PeriodicalIF":1.1,"publicationDate":"2018-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2018.1505265","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48261042","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-08-09DOI: 10.1080/10291954.2018.1487503
M. Malan, N. Stegmann
The accounting profession highlights lifelong learning as a vital fundamental competency. Peer assessment, self-assessment and self-directedness contribute to the development of lifelong learning skills. These interrelated skills should be fostered through higher education programmes, requiring intentional interventions. Peer assessment is regarded as an under-utilised intervention in the undergraduate accounting programme of South African universities. In order to assess the experience of students of a peer assessment intervention, students were required to mark the assignment of a peer and provide him or her with feedback. The peer was then allowed to attempt to improve on the assignment, based on feedback: a ‘review – revise – resubmit’ approach. The research is based on a mixed methods design called concurrent triangulation. It was found that students recognised the value of peer assessment in contributing to their ability to learn independently, take responsibility for their own learning, assume the position of a peer assessor and self-assess, all aspects ascribed to self-directedness. The research furthermore found that peer assessment could enhance students’ understanding of the assessment process and stimulate collaborative learning, both aspects impacting the development of lifelong learning skills needed for future academic development and application in professional careers.
{"title":"Accounting students’ experiences of peer assessment: A tool to develop lifelong learning","authors":"M. Malan, N. Stegmann","doi":"10.1080/10291954.2018.1487503","DOIUrl":"https://doi.org/10.1080/10291954.2018.1487503","url":null,"abstract":"The accounting profession highlights lifelong learning as a vital fundamental competency. Peer assessment, self-assessment and self-directedness contribute to the development of lifelong learning skills. These interrelated skills should be fostered through higher education programmes, requiring intentional interventions. Peer assessment is regarded as an under-utilised intervention in the undergraduate accounting programme of South African universities. In order to assess the experience of students of a peer assessment intervention, students were required to mark the assignment of a peer and provide him or her with feedback. The peer was then allowed to attempt to improve on the assignment, based on feedback: a ‘review – revise – resubmit’ approach. The research is based on a mixed methods design called concurrent triangulation. It was found that students recognised the value of peer assessment in contributing to their ability to learn independently, take responsibility for their own learning, assume the position of a peer assessor and self-assess, all aspects ascribed to self-directedness. The research furthermore found that peer assessment could enhance students’ understanding of the assessment process and stimulate collaborative learning, both aspects impacting the development of lifelong learning skills needed for future academic development and application in professional careers.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"205 - 224"},"PeriodicalIF":1.1,"publicationDate":"2018-08-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2018.1487503","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48679812","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-06-19DOI: 10.1080/10291954.2018.1465149
Nadia Mans-Kemp, S. Viviers
Given growing inequality in South Africa, shareholders are increasingly questioning the size and composition of executive remuneration packages. They are also demanding greater transparency on the criteria and processes used to award performance incentives. The researchers hence investigated the extent and depth to which a sample of companies listed on the Johannesburg Stock Exchange (JSE) disclosed details on their executive performance evaluations. Attention was furthermore given to whether these companies reported a link between their executives’ pay and performance. The criteria and time frames used to evaluate and reward executive performance were also explored. Content analysis was performed on 2 136 annual/integrated reports over the period 2002 to 2015. Semi-structured personal interviews were also conducted with six directors serving on local remuneration committees. Controlling for company size, a significant increase was noted in the number of JSE-listed companies that disclosed information on their executive performance evaluations over the research period. The depth of these disclosures, however, remains superficial. As such, shareholders are constrained in their ability to hold remuneration committees accountable. These committees are encouraged to adopt a wider range of performance criteria and re-assess their focus on short-term performance. It is also suggested that commerce educators cultivate an appreciation for long-term, sustainable value creation among graduates.
{"title":"Executive performance evaluation and remuneration: Disclosure and practices of selected listed South African companies (2002−2015)","authors":"Nadia Mans-Kemp, S. Viviers","doi":"10.1080/10291954.2018.1465149","DOIUrl":"https://doi.org/10.1080/10291954.2018.1465149","url":null,"abstract":"Given growing inequality in South Africa, shareholders are increasingly questioning the size and composition of executive remuneration packages. They are also demanding greater transparency on the criteria and processes used to award performance incentives. The researchers hence investigated the extent and depth to which a sample of companies listed on the Johannesburg Stock Exchange (JSE) disclosed details on their executive performance evaluations. Attention was furthermore given to whether these companies reported a link between their executives’ pay and performance. The criteria and time frames used to evaluate and reward executive performance were also explored. Content analysis was performed on 2 136 annual/integrated reports over the period 2002 to 2015. Semi-structured personal interviews were also conducted with six directors serving on local remuneration committees. Controlling for company size, a significant increase was noted in the number of JSE-listed companies that disclosed information on their executive performance evaluations over the research period. The depth of these disclosures, however, remains superficial. As such, shareholders are constrained in their ability to hold remuneration committees accountable. These committees are encouraged to adopt a wider range of performance criteria and re-assess their focus on short-term performance. It is also suggested that commerce educators cultivate an appreciation for long-term, sustainable value creation among graduates.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"154 - 173"},"PeriodicalIF":1.1,"publicationDate":"2018-06-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2018.1465149","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46088535","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-03-13DOI: 10.1080/10291954.2018.1442649
E. Papageorgiou, C. Callaghan
This study seeks to investigate the contribution of individual personality differences to diverse aspects of accounting student adjustment to university in the context of a South African university. In a context in which many have but one opportunity to access higher education, knowledge of specific personality-related vulnerabilities to adjustment is considered. Multiple linear regression analysis was applied to 939 questionnaire responses of first-year accountancy students. Findings indicate that conscientiousness may offer an adjustment advantage across almost all adjustment dimensions, and neuroticism might represent a specific vulnerability. Findings may have implications for university contexts globally which share similarities with the South African university context of increasing diversity.
{"title":"Personality and adjustment in South African higher education accounting studies","authors":"E. Papageorgiou, C. Callaghan","doi":"10.1080/10291954.2018.1442649","DOIUrl":"https://doi.org/10.1080/10291954.2018.1442649","url":null,"abstract":"This study seeks to investigate the contribution of individual personality differences to diverse aspects of accounting student adjustment to university in the context of a South African university. In a context in which many have but one opportunity to access higher education, knowledge of specific personality-related vulnerabilities to adjustment is considered. Multiple linear regression analysis was applied to 939 questionnaire responses of first-year accountancy students. Findings indicate that conscientiousness may offer an adjustment advantage across almost all adjustment dimensions, and neuroticism might represent a specific vulnerability. Findings may have implications for university contexts globally which share similarities with the South African university context of increasing diversity.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"189 - 204"},"PeriodicalIF":1.1,"publicationDate":"2018-03-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2018.1442649","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48073189","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-01-02DOI: 10.1080/10291954.2017.1342326
E. van Wyk, T. Troost
‘Carried interest’ is not defined in the South African Income Tax Act 58 of 1962 as amended (the Act), nor has it been subject to scrutiny in South African courts. Uncertainty prevails regarding the classification of a carried interest for normal tax purposes in SA. This article investigated the possible normal tax treatment of a carried interest for a fund manager regarding the definition of a fringe benefit, or, alternatively in terms of the gross income definition of the Act. Distinction was made between the initial receipt of a carried interest and the subsequent cash flow therefrom upon liquidation of the fund. The effect of section 9C of the Act was also considered. The current normal tax treatment of a carried interest in the USA and the Netherlands facilitated an interesting comparison and provided some perspective. Finally, the effect of the guidelines formulated by the South African courts on the underlying investments of, and consequently on a carried interest in, an investment fund was also considered. It was concluded that the cash flow from a carried interest and its subsequent distribution to fund managers is capital in nature, except where one of three exceptions are present. The authors conclude that guidelines are required that consider the hybrid character of a carried interest. It is suggested that specific legislation is considered for the taxation of a carried interest. Such legislation must be researched to ensure that the change will not result in the withdrawal of foreign investment from South Africa, or an exodus of current resident investment funds.
{"title":"An investigation into the normal tax implications of a carried interest in South Africa","authors":"E. van Wyk, T. Troost","doi":"10.1080/10291954.2017.1342326","DOIUrl":"https://doi.org/10.1080/10291954.2017.1342326","url":null,"abstract":"‘Carried interest’ is not defined in the South African Income Tax Act 58 of 1962 as amended (the Act), nor has it been subject to scrutiny in South African courts. Uncertainty prevails regarding the classification of a carried interest for normal tax purposes in SA. This article investigated the possible normal tax treatment of a carried interest for a fund manager regarding the definition of a fringe benefit, or, alternatively in terms of the gross income definition of the Act. Distinction was made between the initial receipt of a carried interest and the subsequent cash flow therefrom upon liquidation of the fund. The effect of section 9C of the Act was also considered. The current normal tax treatment of a carried interest in the USA and the Netherlands facilitated an interesting comparison and provided some perspective. Finally, the effect of the guidelines formulated by the South African courts on the underlying investments of, and consequently on a carried interest in, an investment fund was also considered. It was concluded that the cash flow from a carried interest and its subsequent distribution to fund managers is capital in nature, except where one of three exceptions are present. The authors conclude that guidelines are required that consider the hybrid character of a carried interest. It is suggested that specific legislation is considered for the taxation of a carried interest. Such legislation must be researched to ensure that the change will not result in the withdrawal of foreign investment from South Africa, or an exodus of current resident investment funds.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"44 6","pages":"25 - 45"},"PeriodicalIF":1.1,"publicationDate":"2018-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2017.1342326","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41305055","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-01-02DOI: 10.1080/10291954.2017.1414350
W. Rosslyn-Smith, M. Pretorius
While reorganisation procedures aim to salvage financially distressed firms, they are often abused, as uneconomic, failing firms commence with proceedings that erode value rather than preserve it. The commencement standard for business rescue is aimed at preventing such abuse, though it is often hampered by vagueness and limited practical application. Drawing on turnaround literature and the requirements of a commencement standard, this study attempts to address these drawbacks by assessing the prospect of reorganisation on commencement. The study identifies from the turnaround literature nine liabilities that could prove fatal. Under the widely-held principle of value maximisation, the researchers then propose a ‘likelihood of liquidation’ framework to evaluate, before the commencement of proceedings, the reasonable prospect of the firm’s recovering. The analysis in this paper sets the agenda for future research and provides an opportunity to explore the practical application of the framework.
{"title":"A liabilities approach to the likelihood of liquidation in business rescue","authors":"W. Rosslyn-Smith, M. Pretorius","doi":"10.1080/10291954.2017.1414350","DOIUrl":"https://doi.org/10.1080/10291954.2017.1414350","url":null,"abstract":"While reorganisation procedures aim to salvage financially distressed firms, they are often abused, as uneconomic, failing firms commence with proceedings that erode value rather than preserve it. The commencement standard for business rescue is aimed at preventing such abuse, though it is often hampered by vagueness and limited practical application. Drawing on turnaround literature and the requirements of a commencement standard, this study attempts to address these drawbacks by assessing the prospect of reorganisation on commencement. The study identifies from the turnaround literature nine liabilities that could prove fatal. Under the widely-held principle of value maximisation, the researchers then propose a ‘likelihood of liquidation’ framework to evaluate, before the commencement of proceedings, the reasonable prospect of the firm’s recovering. The analysis in this paper sets the agenda for future research and provides an opportunity to explore the practical application of the framework.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"107 - 88"},"PeriodicalIF":1.1,"publicationDate":"2018-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2017.1414350","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45633019","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-01-02DOI: 10.1080/10291954.2017.1342348
M. Razak, L. Stainbank
This study uses a content analysis of 82 listed South African companies’ annual reports to determine the extent to which South African listed companies in the non-financial sector choose optional fair value accounting (FVA). The study found that almost all companies disclosed historical cost as their primary measurement basis, disclosed FVA for financial instruments as the exception to the historical cost basis, and generally did not choose the fair value option in areas where International Financial Reporting Standards offer a free choice of whether or not to apply FVA. More specifically, most companies did not choose optional FVA for property, plant and equipment and did not choose optional FVA for intangible assets. Seventy-eight percent (78%) of the non-property investment companies did not choose optional FVA for investment properties in contrast to the property-investment companies where nearly all adopted optional FVA to account for their investment properties. Ninety-six percent (96%) of companies did not account for investments in subsidiaries, associates and joint ventures at fair value in their separate financial statements. The study therefore concludes that companies generally do not adopt optional FVA where there is a choice of whether to do so or not.
{"title":"Fair value accounting by listed South African companies in the non-financial sector","authors":"M. Razak, L. Stainbank","doi":"10.1080/10291954.2017.1342348","DOIUrl":"https://doi.org/10.1080/10291954.2017.1342348","url":null,"abstract":"This study uses a content analysis of 82 listed South African companies’ annual reports to determine the extent to which South African listed companies in the non-financial sector choose optional fair value accounting (FVA). The study found that almost all companies disclosed historical cost as their primary measurement basis, disclosed FVA for financial instruments as the exception to the historical cost basis, and generally did not choose the fair value option in areas where International Financial Reporting Standards offer a free choice of whether or not to apply FVA. More specifically, most companies did not choose optional FVA for property, plant and equipment and did not choose optional FVA for intangible assets. Seventy-eight percent (78%) of the non-property investment companies did not choose optional FVA for investment properties in contrast to the property-investment companies where nearly all adopted optional FVA to account for their investment properties. Ninety-six percent (96%) of companies did not account for investments in subsidiaries, associates and joint ventures at fair value in their separate financial statements. The study therefore concludes that companies generally do not adopt optional FVA where there is a choice of whether to do so or not.","PeriodicalId":43731,"journal":{"name":"South African Journal of Accounting Research","volume":"32 1","pages":"1 - 24"},"PeriodicalIF":1.1,"publicationDate":"2018-01-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1080/10291954.2017.1342348","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48900148","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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