Internal determinants of financial performance among listed food supermarkets in the South African economy
-
Author(s)Zwelihle Wiseman NzuzaLink to ORCID Index: https://orcid.org/0000-0002-6202-2497
,
Oloyede ObagbuwaLink to ORCID Index: https://orcid.org/0000-0002-1231-4328
,
Rajendra Rajaram
-
DOIhttp://dx.doi.org/10.21511/imfi.21(3).2024.10
-
Article InfoVolume 21 2024, Issue #3, pp. 110-123
- 158 Views
-
66 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study aims to examine the internal determinants of financial performance of food supermarkets listed on the South African stock exchange. Food supermarkets play an integral role in socio-economic development of the country. The study employed an econometric approach utilizing fixed effect panel data. Drawing information from audited financial statements, data were gathered from four major listed food supermarkets in South Africa covering the period from 1994 to 2022, resulting in a total of 116 observations over 29 years. The robust longitudinal statistics obtained from balanced data revealed a significant positive correlation between equity financing, size of corporate governance, and current debt with financial performance, as measured by sales revenue at 0.0000, 0.054, and 0.000 significance levels, respectively. The findings indicate that as these variables increase, the financial performance of the studied food supermarkets (Shoprite, Woolworths, Spar, and Pick n Pay) also increases. Conversely, a negative and significant relationship is noted between company age, current assets, and financial performance at significance levels of 0.007 and 0.002, respectively. This suggests that as these variables increase, financial performance will decrease. As per the research findings, it is imperative for supermarkets to uphold a well-rounded blend of equity and debt and adopt inventive business approaches as they mature to improve financial outcomes. Therefore, the study proposes a framework focusing on internal factors that impact the financial performance of listed food supermarkets in South Africa.
- Keywords
-
JEL Classification (Paper profile tab)G30, G20
-
References50
-
Tables8
-
Figures0
-
- Table 1. Research variables
- Table 2. Correlation matrix results
- Table 3. ANOVA results
- Table 4. Kao test for cointegration
- Table 5. Im-Pesaran-Shin unit-root test
- Table 6. Cross-section dependence, CD ~ N(0,1)
- Table 7. Linear regression, heteroskedastic PCSEs
- Table 8. Cross-sectional time-series FGLS regression
-
- ADB. (2023). Second international summit on food production in Africa to open in Dakar.
- AFRIFA, G. (2013). Working capital management and AIM listed SME companies profitability: a mixed research method approach. Bournemouth University.
- Alexander, G. J., & Buchholz, R. A. (1978). Corporate social responsibility and stock market performance. Academy of Management Journal, 21, 479-486.
- Asaduzzaman, M., & Chowdhury, T. (2014). Effect of working capital management on firm profitability: Empirical evidence from textiles industry of Bangladesh. Research Journal of Finance and Accounting, 5, 175-184.
- Baldwin, R. E. (2012). Global supply chains: why they emerged, why they matter, and where they are going.
- Beck, N. & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American Political Science Review, 89, 634-647.
- Bhagat, S., & Black, B. (1999). The uncertain relationship between board composition and firm performance. The Business Lawyer, 921-963.
- Bhagat, S., & Bolton, B. (2019). Corporate governance and firm performance: The sequel. Journal of Corporate Finance, 58, 142-168.
- Chepkemoi, P. (2013). An analysis of the effects of capital structure of small and medium enterprises on their financial performance: A case of Nakuru town.
- Country-Commercial-Guide, S.-A. (2024). Market Overview.
- Das Nair, R. (2018). The internationalisation of supermarkets and the nature of competitive rivalry in retailing in southern Africa. Development Southern Africa, 35, 315-333.
- Das Nair, R. (2020). The ‘supermarket revolution’in the South. In Handbook on urban food security in the global South (pp. 113-144).
- Das Nair, R., & Dube, S. (2016). The expansion of regional supermarket chains and implications for local suppliers: A comparison of findings from South Africa, Botswana, Zambia, and Zimbabwe.
- De Hoyos, R., & Sarafidis, V. (2007). XTCSD: Stata module to test for cross-sectional dependence in panel data models.
- Ehikioya, B. I. (2009). Corporate governance structure and firm performance in developing economies: evidence from Nigeria. Corporate Governance: The International Journal of Business in Society, 9, 231-243.
- Festus, O. O., & Ayoola, A. O. (2022). Effect of Sales Revenue Growth on the Corporate Performance of Nigerian Listed Foods and Beverages Manufacturing Firms. Review of Business and Economics Studies, 10, 6-12.
- Fitranita, V., Widiyaksa, D., & Asmawanti, D. (2023). The influence of company size, company age, profitability, leverage, sales growth, and independent board of commissioners on Islamic social reporting disclosures. Proceeding International Conference on Accounting and Finance, 66-75.
- Fitrios, R. (2016). Factors that influence accounting information system implementation and accounting information quality. International Journal of Scientific & Technology Research, 5, 192-198.
- Foster-Mcgregor, N., Kaulich, F., & Stehrer, R. (2015). Global value chains in Africa.
- Ganda. (2021). Carbon performance, company financial performance, financial value and transmission channel: An analysis of South African listed companies.
- Geda, A., & Yimer, A. (2023). The trade effects of the African Continental Free Trade Area: An empirical analysis. The World Economy, 46, 328-345.
- Githaigo, P. N., & Kabiru, C. G. (2015). Debt financing and financial performance of small and medium size enterprises: evidence from Kenya. Journal of Economics, Finance and Accounting, 2.
- Githire, C., & Muturi, W. (2015). Effects of capital structure on financial performance of firms in Kenya: Evidence from firms listed at the Nairobi securities exchange. International Journal of Economics, Commerce and Management, 3, 1-10.
- Huang, R., Marquardt, C. A., & Zhang, B. (2015). Using sales revenue as a performance measure.
- Javid, S., & Zita, V. P. (2014). Impact of working capital policy on firm’s profitability: A case of Pakistan cement industry. Research Journal of Finance and Accounting, 5, 182-191.
- Kao, C. (1999). Spurious regression and residual-based tests for cointegration in panel data. Journal of Econometrics, 90, 1-44.
- Kasozi, J. (2017). The effect of working capital management on profitability: a case of listed manufacturing firms in South Africa. Investment Management and Financial Innovations, 14, 336-346.
- Kibtiyah, M., & Maryanti, E. (2022). The Influence of Good Corporate Governance, Company Size, Capital Structure and Company Growth on the Financial Performance of Retail Companies Listed on the IDX. Indonesian Journal of Innovation Studies, 20.
- Le, H.-L., Vu, K.-T., Du, N.-K. & Tran, M. D. (2018). Impact of working capital management on financial performance: The case of Vietnam. International Journal of Applied Economics, Finance and Accounting, 3, 15-20.
- Mallin, C. A. (2016). Corporate governance. Oxford university press.
- Manyane. (2022). Spar Group and CEO accused of defrauding BEE funding.
- Muturi, W., & Njeru, A. (2019). Effect of equity finance on financial performance of small and medium enterprises in Kenya. International Journal of Business and Social Science, 10, 60-75.
- Napompech, K. (2012). Effects of working capital management on the profitability of Thai listed firms. International Journal of Trade, Economics and Finance, 3, 227-232.
- Njagi, I. K., Maina, K. E. & Kariuki, S. N. (2017). Equity financing and financial performance of small and medium enterprises in Embu Town, Kenya.
- Nyamita, M. O. (2014). Factors influencing debt financing and its effects on financial performance of state corporations in Kenya.
- Nzuza, Z. W. (2015). Factors affecting the success of inventory control in the Stores Division of the eThekwini Municipality, Durban: a case study.
- Obagbuwa, O., Kwenda, F. & Akinola, G. W. (2021). Monitoring intensity, investment inefficiency and institutional shareholders: Evidence from JSE listed companies in South Africa. Investment Management & Financial Innovations, 18, 1.
- Ongore, V. O., & Kusa, G. B. (2013). Determinants of financial performance of commercial banks in Kenya. International Journal of Economics and Financial Issues, 3, 237-252.
- Paniagua, J., Rivelles, R. & Sapena, J. (2018). Corporate governance and financial performance: The role of ownership and board structure. Journal of Business Research, 89, 229-234.
- Pasara, M. T. & Diko, N. (2020). The effects of AfCFTA on food security sustainability: an analysis of the cereals trade in the SADC region. Sustainability, 12, 1419.
- Ramasamy, B., Ong, D., & Yeung, M. C. (2005). Firm size, ownership and performance in the Malaysian palm oil industry. Asian Academy of Management Journal of Accounting and Finance, 1, 181-104.
- Rashid, C. A., & Jaf, R. A. S. (2023). The Role of Accounting Measurement and Disclosure of Social Capital in Improving Quality of Accounting Information. Iranian Journal of Management Studies, 16.
- Rozeff, M. S. (1982). Growth, beta and agency costs as determinants of dividend payout ratios. Journal of financial Research, 5, 249-259.
- Santarelli, E. & Tran, H. T. (2017). Young innovative companies: Are they high performers in transition economies? Evidence for Vietnam. The Journal of Technology Transfer, 42, 1052-1076.
- Turnbull, S. (1997). Stakeholder governance: A cybernetic and property rights analysis. Corporate Governance: An International Review, 5, 11-23.
- Van De Ven, A. H. (1986). Central problems in the management of innovation. Management Science, 32, 590-607.
- Vance, S. C. (1975). Are socially responsible corporations good investment risks. Management Review, 64, 19-24.
- Wang, J.-Y. & Blomström, M. (1992). Foreign investment and technology transfer: A simple model. European Economic Review, 36, 137-155.
- Weygandt, J. J., Kimmel, P. D. & Kieso, D. E. (2019). Financial accounting. John Wiley & Sons.
- Zariyawati, M. A., Annuar, M. N., Taufiq, H. & Rahim, A. A. (2009). Working capital management and corporate performance: Case of Malaysia. Journal of Modern Accounting and Auditing, 5, 47.
-
Industrial development in Saudi Arabia: disparity in growth and development
Anis Ali
doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
Problems and Perspectives in Management Volume 18, 2020 Issue #2 pp. 23-35 Views: 3013 Downloads: 1023 TO CITE АНОТАЦІЯIndustrial development in any nation plays a vital role in the strengthening of the economy and employs human resources as per specifications and directly towards the mainstream of the nation. In Saudi Arabia, there was rapid industrialization for four decades. Some manufacturing industries performed well, while some internal and external business environment factors influenced the others’ performance. The study focuses on historical development, as well as recent trends of well-performing and poor-performing industries of Saudi Arabia. Small manufacturing industries in Saudi Arabia are underdeveloped and need more attention to attain sustainable and progressive growth rate in the form of the number of establishments to enjoy the potential. Manufacture of tobacco, computer, electronics and optics, pharmaceuticals and transport equipment are the deprived and underdeveloped industries of the manufacturing sector. There should be some easy credit schemes for the development of deprived or underdeveloped manufacturing industries. To attain sustainable growth and development of the manufacturing sector, a positive attitude of the government towards underdeveloped manufacturing industries, favorable labor laws, and entrepreneurial awareness, technical and financial assistance are necessary. The growth and development of the manufacturing sector of Saudi Arabia will be helpful in the attainment of goals of Vision 2030.
-
Why banks should consider ESG risk factors in bank lending?
Sarwar Uddin Ahmed ,
Samiul Parvez Ahmed ,
Ikramul Hasan
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
Banks and Bank Systems Volume 13, 2018 Issue #3 pp. 71-80 Views: 2819 Downloads: 1132 TO CITE АНОТАЦІЯWhy banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.
-
Integrated reporting and financial performance of South African listed banks
Reon Matemane ,
Rozane Wentzel
doi: http://dx.doi.org/10.21511/bbs.14(2).2019.11
Banks and Bank Systems Volume 14, 2019 Issue #2 pp. 128-139 Views: 2771 Downloads: 540 TO CITE АНОТАЦІЯThe recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.
