Title page for ETD etd-05062010-133646


Document Type Master's Dissertation
Author Mathura, Ashley
URN etd-05062010-133646
Document Title The impact of Broad Based Black Economic Empowerment on the financial performance of companies listed on the JSE
Degree MBA
Department Gordon Institute of Business Science
Supervisor
Advisor Name Title
Dr T Mosala Supervisor
Keywords
  • broad based black economic empowerment
Date 2010-04-11
Availability unrestricted
Abstract

This research is aimed at finding empirical evidence to support the relationship between Broad-based Black Economic Empowerment (BBBEE) compliance and the financial performance of South African companies on the JSE. An independent measure of the BEE score was obtained from the Empowerdex Top Empowerment Companies (TEC) ranking from 2004 to 2009. 14 sectors on the JSE were selected to ensure inclusion of all major industries in South Africa. A total of 209 companies were selected, and the multivariate exploratory technique of Cluster Analysis was used. The predictor variable of the companyís BEE status was then compared to a number of financial performance indicators such as annual share price, price-tobook value ratio and the price-to-earnings ratio (i.e. the outcome variables). By standardising the variables of the BEE score and using Compound Annual Growth Rate (CAGR), the k-means Clustering method yielded four interpretable clusters with 15, 64, 95 and 35 companies respectively.

The finding indicate that only in the case of the cluster of companies that increased itís BEE score, were all three profitability measures significantly different and, according to the means, in the direction of higher profitability. However, there were no significant differences in the results to support the proposition that low-BEE scores of companies had a negative impact on their profitability and their firmís value over time.

© 2009 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria.

Please cite as follows:

Mathura, A 2009, The impact of broad based black economic empowerment on the financial performance of companies listed on the JSE, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-05062010-133646/ >

G10/337/ag

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