Browsing by Author "Marais, Alastair Malcolm."

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Mergers and acquisitions on the JSE: the impact on acquirer’s returns when merging with either private or public companies.
(2019) Mgilane, Lumka Shirley.; Marais, Alastair Malcolm.; Gumede, Zamanguni Hariatah.
Over the past years mergers and acquisitions have been the leading strategies for expansion, growing the business as well as tapping into new markets. They are commonly used as the preferred method of rapid growth as the companies merge resources to create access to innovation and expanding the business. The majority of empirical literature in the South African context focuses on stock returns after the announcement of the mergers and acquisitions, as well as analysing the method of payment, whether cash or issue of shares. This research explored the impact of mergers and acquisitions on the shareholder value of Johannesburg Stock Exchange listed acquiring companies when acquiring a private company compared to acquiring a public company. The study analysed the impact of a merger and acquisition announcement on the overall shares. The focus point was analysing the difference in returns when an acquiring company acquired control in a private company compared to when an acquiring company targeted a public listed company. A quantitative approach was utilised for the purpose of this research. An event study methodology was used with three window day periods being used, namely 3 days, 21 days and 41 days. The research included companies that were involved in mergers and acquisitions from 2011 to 2016 and the sample size was 94 companies. The results indicated that the acquisitions of private companies had statistically significant positive returns to the shareholders of the acquiring company. The acquisition of public listed companies did not, however, add value to the shareholders as the returns were not significant.
Tone at the top's role in the detection and prevention of financial statement manipulation in South africa.
(2024) Marais, Alastair Malcolm.; Vermaak, Claire Lauren.; Shewell, Patricia Maureen.
Corporate frauds destroy wealth, undermining investor confidence. Given the severity of corporate fraud, regulators have enhanced monitoring mechanisms designed to prevent and detect financial statement manipulation. Despite these efforts, financial statement manipulation continues to occur, and academic research has found mixed results regarding the effectiveness of interventions. An identified reason is that a company’s overall culture, as set by the tone at the top, may undermine the effectiveness of monitoring mechanisms. Consequently, this study investigated the role of tone at the top in detecting and preventing financial statement manipulation. The study adopted a quantitative methodology, analysing data from non-financial firms on the JSE, to estimate how tone at the top moderates the effectiveness of three fundamental monitoring mechanisms: the audit committee, the external auditor and the market reaction. The study’s first paper found that commonly used financial statement manipulation detection models (the Beneish M-score and Dechow et al. F-score) are unsuitable in South Africa. Consequently, the study used two measures to proxy for financial statement manipulation: financial statement fraud and accruals-based earnings management. Tone at the top was measured by analysing CEO statements in the annual report using the DICTION software’s five master variables. Principal component analysis was used to reduce these five themes into two primary tones: autocratic and pragmatic. Principal component analysis was also used to develop five audit committee (activity, diversity, financial expertise, governance expertise and independence) and two external auditor proxies (competence and independence). The market reaction was measured using cumulative abnormal returns. The relationships between these variables were estimated using panel data regression methods. Overall, the study found that tone at the top is not directly related to financial statement manipulation. Considering tone at the top’s moderating effect, the findings suggested that an autocratic tone undermines the effectiveness of audit committees’ activity and diversity. However, the autocratic tone can enhance the committees’ financial expertise and independence, the external auditors’ competence, and result in a more negative market reaction to financial statement manipulation. In contrast, the pragmatic tone can inhibit the audit committees’ financial expertise, but enhance its activity and diversity. The pragmatic tone does not impact the external auditor or the market reaction. These findings would interest regulators, investors, audit committee members, external auditors and market analysts as they show the importance of understanding how tone at the top either undermines or supports these monitoring mechanisms. Consequently, careful attention must be paid to the individuals appointed to key monitoring positions to ensure they will be effective rather than ceremonial.
Women in the boardroom and financial performance: an analysis of JSE listed companies.
(2022) Dockrat, Raeesa.; Marais, Alastair Malcolm.
Despite the awareness created around gender inequality and the diverse strengths women bring to the business world, progress in gender diversity has been negligible. In South Africa, despite employment equity policies being established in 1998, after 21 years, women in post-apartheid South Africa do not occupy even close to an equal share of executive positions in business as compared to men. This study explored the association between female representation on company boards and an organisation’s financial performance. Unlike previous South African studies, this study utilized a longer period of time, from 2007 to 2016, and included a period during which gender diversity has increased in pervasiveness and there is a higher proportion of women in executive positions. The Johannesburg Stock Exchange (JSE) Top 40 listed companies were selected as the sample for this study. The data of listed companies on the JSE were sourced from the IRESS and the Bloomberg database. A dynamic linear regression model with generalized method of moments (GMM) estimation was used to conduct a robust analysis. This study found a positive and statistically significant relationship between the accounting based financial measures (return on assets and return on equity) as well as the market-based performance measure (Tobin’s Q) and board gender diversity, measured as the proportion of women on the board of directors. This implies that firms with a well gender-diversified board perform better financially. The study contributes to existing literature on whether achieving gender diversity at a board level does in fact add significant benefit to shareholders wealth and a firms’ bottom line. It influences an important policy debate and will be of interest to academics and stakeholders including directors, investors, regulators and women’s rights advocates.