Integrating ESG factors in investment decisions by mutual fund managers: a case of selected Johannesburg Stock Exchange-listed companies
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Received October 22, 2020;Accepted November 24, 2020;Published December 7, 2020
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Author(s)Link to ORCID Index: https://orcid.org/0000-0002-8763-0616
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DOIhttp://dx.doi.org/10.21511/imfi.17(4).2020.23
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Article InfoVolume 17 2020, Issue #4, pp. 258-270
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Cited by4 articlesJournal title: Journal of Economics, Finance and Administrative ScienceArticle title: Taking ESG strategies for achieving profits: a dynamic panel data analysisDOI: 10.1108/JEFAS-02-2023-0030Volume: / Issue: / First page: / Year: 2024Contributors: Alejandro J. Useche, Jennifer Martínez-Ferrero, Giovanni E. ReyesJournal title: Vision: The Journal of Business PerspectiveArticle title: Corporate Sustainability Practices: A Systematic Literature Review and Bibliometric AnalysisDOI: 10.1177/09722629231203125Volume: / Issue: / First page: / Year: 2023Contributors: K. P. Sabirali, S. MahalakshmiJournal title: Mathematical Problems in EngineeringArticle title: Deep Learning Model for Stock Excess Return Prediction Based on Nonlinear Random Matrix and Esg FactorDOI: 10.1155/2022/5239493Volume: 2022 / Issue: / First page: 1 / Year: 2022Contributors: Tiantian Meng, M. H. Yahya, Jingmin Chai, Zaoli YangJournal title: Revista Venezolana de GerenciaArticle title: Reportes y dimensiones de la sostenibilidad corporativa. Un análisis bibliométricoDOI: 10.52080/rvgluz.29.108.16Volume: 29 / Issue: 108 / First page: / Year: 2024Contributors: Rodrigo Alfonso Saavedra Najar, Luz Dary González, Jheisson Andres Abril Teatin
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This paper examines whether mutual fund managers incorporate environmental, social, and governance (ESG) factors when deciding which sector to invest on behalf of their trustees. In doing this, the top 20 South African mutual fund companies (asset managers) listed on the Johannesburg Stock Exchange (JSE) were selected. The paper identified the top 30 JSE listed companies (in the large industrial, equipment, and machinery sectors, excluding unlisted and service-oriented companies) where trustees’ funds were invested (with a total of 28 companies between 2007 and 2017) from the mutual fund companies’ Equity Fund Fact Sheets 2017 (representing recent investment focus). ESG data were collected from the integrated and sustainability reports at the sampled companies’ websites, and financial data were sourced from the IRESS database. This study adopted the panel data analysis. The results show an insignificant negative relationship between the ESG proxies (water usage, employee health and safety cost [number of work-related fatalities], percentage of women on corporate board) and return on equity (ROE). This means that the sampled companies disregard the United Nations Principle of Responsible Investment (UN PRI) guideline, suggesting that asset managers focus on increasing returns on shareholders’ investment without considering ESG issues. The paper concludes that the disregard for responsible investment guidelines does not encourage companies to improve their unsustainable business practices.
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JEL Classification (Paper profile tab)Q51, Q56
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References63
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Tables6
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Figures0
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- Table 1. Descriptive statistics of study variables
- Table 2. Regression analysis results
- Table 3. Shapiro-Wilk W test for normality
- Table 4. Multicollinearity test
- Table 5. Random-effects model
- Table 6. Hausman test results
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Conceptualization
Michael Bamidele Fakoya, Segopotje Evonia Malatji
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Data curation
Michael Bamidele Fakoya, Segopotje Evonia Malatji
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Formal Analysis
Michael Bamidele Fakoya, Segopotje Evonia Malatji
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Methodology
Michael Bamidele Fakoya
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Project administration
Michael Bamidele Fakoya
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Validation
Michael Bamidele Fakoya
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Writing – review & editing
Michael Bamidele Fakoya
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Investigation
Segopotje Evonia Malatji
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Writing – original draft
Segopotje Evonia Malatji
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Conceptualization
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Does board composition have an impact on CSR reporting?
Problems and Perspectives in Management Volume 15, 2017 Issue #2 pp. 19-35 Views: 4473 Downloads: 1719 TO CITE АНОТАЦІЯCorporate social responsibility (CSR) reporting plays a key role in management control, particularly in light of the increased demand for non-financial reporting after the financial crisis of 2008–2009. This literature review evaluates 47 empirical studies that concentrate on the influence of several board composition variables on the quantity and quality of CSR reporting. The author briefly introduces the research framework that underpins current empirical studies in this field. This is followed by a discussion of the main variables of board composition: (1) committees (audit and CSR committees), (2) board independence, (3) board expertise, (4) CEO duality, (5) board diversity (gender and foreign diversity), (6) board activity, and (7) board size. The author, then, summarizes the key findings, discusses the limitations of the existing research and offers useful recommendations for researchers, firm practice and regulators.
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Corporate governance and financial performance: an empirical analysis of selected multinational firms in Nigeria
Gideon Tayo Akinleye , Odunayo Olarewaju , Bamikole Samson Fajuyagbe doi: http://dx.doi.org/10.21511/ppm.17(1).2019.02Problems and Perspectives in Management Volume 17, 2019 Issue #1 pp. 11-18 Views: 3410 Downloads: 570 TO CITE АНОТАЦІЯThis study focused on corporate governance and performance of selected Nigerian multinational firms from 2012 to 2016. Specifically, the study focused on the effect of board size, activism and committee activism on return on asset and firm growth rate. Secondary data collected from four multinational firms were analyzed via static panel estimation techniques. While board size and board activism exerted significant negative impact on return on asset, committee activism exerted insignificant impact. The results of the study further showed that board size and board activism exert insignificant negative impact on firm’s growth rate, while committee activism insignificantly spurs firm’s growth rate. Decisively, discoveries from this study reflect that corporate governance has significant negative impact on return on asset, but has insignificant influence on the growth rate of Nigerian multinational firms. Based on these findings, the authors recommended that corporate governance dynamics in firms world over should be reconsidered, such that it gives credence to more than just numbers of persons or meetings held, but the main reasons and deliberations in such meetings. It was also recommended that excessive increase in magnitude or frequency of meetings held by board of directors cum committee should be avoided.
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Impact of corporate governance mechanisms on financial reporting quality: a study of Indian GAAP and Indian Accounting Standards
Faozi A. Almaqtari , Abdulwahid Abdullah Hashed , Mohd Shamim , Waleed M. Al-ahdal doi: http://dx.doi.org/10.21511/ppm.18(4).2020.01Problems and Perspectives in Management Volume 18, 2020 Issue #4 pp. 1-13 Views: 2960 Downloads: 612 TO CITE АНОТАЦІЯThe present study examines the impact of corporate governance mechanisms on financial reporting quality under Indian GAAP and Indian Accounting Standards (Ind. AS). A sample of 97 companies listed on the Bombay Stock Exchange is selected. Corporate governance mechanisms have been considered as independent variables, and financial reporting quality is the dependent variable. Corporate governance is measured by board effectiveness (board size, independence, diligence, and expertise), audit committee attributes (size, independence, diligence, and expertise), foreign ownership, and audit quality. Descriptive statistics, correlation, and OLS regression are conducted to estimate the results. The study results reveal that board characteristics and audit committee attributes, except for audit committee diligence, have a significant effect on financial reporting quality. However, the impact of board diligence and audit committee attributes is negative. Foreign ownership has no contribution to financial reporting quality, but audit quality has a significant effect. The findings of the study have considerable implications for regulators, policymakers, managers, investors, analysts, and academicians. More emphasis should be given to compliance with Ind. AS, and an oversight body for compliance with Ind. AS should be established.
Acknowledgment
This publication was supported by Deanship of Scientific Research, Prince Sattam Bin Abdulaziz University, Alkharj, Saudi Arabia.