Faculty of Accounting and Informatics

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Enhancing operational risk management in the Mauritian banking sector : a structured approach
(EconJournals, 2024) Ramdani, Lovena; Abbana, Sharanam; Marimuthu, Ferina
The purpose of this study aims to improve risk control, mitigation, and interbank risk comparison by advocating for Mauritian banks to adopt a standardised operational risk definition. The study suggests improving operational risk reduction or hedging, encouraging openness in risk management capabilities, and standardising risk assessment methods in accordance with Bank of Mauritius requirements. The study also recommends that banks create operational risk management committees to supervise risk control and mitigation initiatives. These committees should be composed of experienced personnel who are well-versed in the consequences of operational risk in the banking industry. Using a mixed-method approach, insights are obtained from various banks operating in Mauritius, with data acquired from a substantial sample of 150 participants. Targeting Mauritian bankers, questionnaires were distributed across reputable banks, and data were meticulously collected and analysed. The findings highlight contemporary concerns regarding economic well-being and the security of assets held by banks. It is recommended to implement changes on a modest scale initially, subject to close monitoring over a specified period, with the possibility of gradual expansion if successful outcomes ensue. In conclusion, this research is significant due to the limited exploration into operational risk management within the Mauritian context.
Unearthing financial wisdom : exploring the factors shaping financial literacy among agribusiness entrepreneurs in Zimbabwe
(2024-03) Gumbo, Lilian; Marimuthu, Ferina; Vengesai, Edson
Purpose: Agribusiness serves as the cornerstone of the Zimbabwean economy, with a significant portion of the population relying on agricultural-related pursuits for sustenance. However, the concerning financial practices exhibited by agribusiness entrepreneurs, coupled with lackluster sectoral performance, present pressing issues. These issues manifest as pronounced instances of financial exclusion, loan defaults, and diminished productivity within the sector. The primary focus of this study was to assess the financial literacy of agribusiness entrepreneurs and elucidate the principal determinants of this literacy, employing the theoretical framework of the lifecycle hypothesis. Design/methodology/approach: The research design employed was explanatory in nature, involving the collection and subsequent quantitative analysis of data via questionnaires. The study encompassed a population of 172,221 agribusiness farmers hailing from five distinct districts in Zimbabwe, namely Mutare, Mt Darwin, Mutoko, Gweru, and Masvingo. To ensure a representative sample, a sample size of 623 was calculated utilizing the Slovin formula. Findings: The research outcomes unveiled an overall deficiency in financial literacy within the agribusiness sector, particularly pronounced among women, individuals with low incomes, those possessing limited educational attainment, and those supporting multiple dependents below the age of 18. As a crucial recommendation, the study advocates for the implementation of mandatory financial literacy courses at both the primary and secondary education levels. Such an intervention could contribute significantly to addressing the identified shortcomings in financial literacy among agribusiness entrepreneurs and subsequently foster more prudent financial behaviors within the sector.
An evaluation of the level of financial reporting compliance of public schools in KwaZulu-Natal
(Universitas Negeri Yogyakarta, 2023) Maama, Haruna; Zungu, Amos; Oluka, Alexander Markey; Marimuthu, Ferina
The financial management and reporting practices of public schools in KwaZulu-Natal (KZN) are a matter of concern. Section 42 of the South African Schools Act (SASA) requires that the Member of the Executive Council (MECs) for Education in KZN develops financial reporting guidelines for the schools. As a result, each province in South Africa has its l financial reporting guidelines that provide a framework for schools to report their financial information accurately and transparently. However, there are concerns about the lack of financial accountability and transparency emanating from improper financial reporting on the parts of the schools. Poor reporting practices of KZN schools may lead to negative consequences such as financial mismanagement, misappropriation of funds, and inability to account for expenditures. As a result, this study examined how public ordinary schools complied with the financial reporting requirements set forth by the KZN Provincial Department of Education (PDE). The study used a content analysis method to collect data from 58 schools’ yearly financial statements over a two-year period. Descriptive statistics were used to analyze the quantitative data gathered from the financial statements to assess the degree of conformity with KZN PDE financial reporting rules. The findings revealed various instances of public schools failing to follow the rules. The schools’ reporting practices were particularly poor since they did not adhere to the reporting standards. The research contributes to understanding financial reporting compliance levels among schools in KZN. The study also provides recommendations to improve compliance and promote school financial accountability.
A longitudinal analysis of environmental reporting practices of listed manufacturing firms in South Africa
(CSRC Publishing, Center for Sustainability Research and Consultancy, 2023-03) Mgilane, Nolwando; Maama, Haruna; Marimuthu, Ferina
Purpose: Environmental reporting has become a buzzword in the corporate reporting ecosystem, prompting questions about how firms practise it. This study aims to assess the environmental reporting practices of manufacturing firms listed on the JSE in South Africa. Design/methodology/approach: The data collection involved using a content analysis method to extract environmental information from the annual reports of 50 manufacturing firms from 2016 to 2020. Descriptive analysis and Wilcoxon signed ranked test were used to present the trend results and significance level in the changes of environmental reporting over the years. Findings: The results demonstrated an increasing trend in environmental reporting amongst the firms. Notably, the firms disclosed more information about their social and environmental activities, with little reporting emphasis on environmental degradation. The evidence further showed a significant increase in environmental reporting practices over the years. These findings complement the arguments of the legitimacy disclosure theory, suggesting that a quality environmental disclosure portrays firms as environmentally accountable and responsible, resulting in a competitive advantage and winning the trust of the public. Implications/ Originality/value: The study solidifies the existing definitions of legitimacy and stakeholder theory. It also provides consolidated evidence on the movements and trends amongst the social and environmental practices from JSE-listed manufacturing firms' perspectives.
Financial literacy operationalization model for agribusiness entrepreneurs in Zimbabwe
(International Institute for Science, Technology and Education, 2023-01) Gumbo, Lilian; Marimuthu, Ferina; Vengesai Edson
Agribusiness is the cornerstone of the Zimbabwean economy as most people survive on agricultural related activities and it is regarded as the first step to fighting poverty among the rural population. However, the sector has not been performing well in terms of productivity due to various factors, which include poor management of borrowed funds, higher loan defaults and financial exclusion. The study sought to assess the level of financial knowledge, financial behaviours, and financial attitudes of agribusiness entrepreneurs and to develop an operationalisation model for improving financial literacy. Pragmatism research philosophy guided this research to use mixed method approaches and sequential mixed method research design. Quantitative data was first collected using a research questionnaire, followed by interviews that were conducted to build upon quantitative results. Multistage cluster sampling and convenience sampling was used to select research participants. Research findings established that agribusiness entrepreneurs: (1) have low financial knowledge, (2) exhibit poor financial behaviours (3) have good financial attitudes except for diverting a portion of business loans for personal use. The general level of financial literacy was very low among agribusiness entrepreneurs. Hence the study recommended a financial literacy operationalisation model for agribusiness entrepreneurs for consideration by policy makers.
The effect of tax avoidance and tax evasion on the performance of South African economy
(EconJournals, 2024-01-20) Mvunabandi, Jean Damascene; Nomala, Bomi; Marimuthu, Ferina
Using a quantitative longitudinal trends analysis, this study analysed the link between tax evasion and avoidance. The main aim was to assess the implications of evasion and avoidance of taxes on South African economy progress from 1994-2021. Publically secondary data available from South African Revenue authority were gathered. The data gathered provided us with basis of longitudinal statistical analysis of the extent of tax evasion and or tax avoidance affected the economic growth in the years 1994-2021. The Eviews 10 Results was used to estimate elasticities and buoyancies for major taxes with respect of South Africa’s economic growth for years 1994-2021. The natural logarithm of the gap between total budgeted tax income and realised tax income was also employed as a metric of tax evasion and avoidance in South Africa for this key research work. Ordinary Least Squares Regression (OLS) regression analysis was employed to evaluate whether the link between Gross Domestic Product (GDP) and tax evaded and avoided is strong or weak. Test for stationarity to see whether the parameter does not vary over time and for OLS was performed. The overall analysis of tax evasion and avoidance upon South African economy showed the increased tax revenue resulted in surpluses between tax revenue budgeted, tax revenue collected and economic growth (GDP), meaning tax evasion and avoidance in South Africa are minimal. The study's findings disprove prior studies that suggest that tax evasion and tax avoidance seriously affect Gross Domestic Products (GDP) and refute the null hypothesis of this study. However, the study’s results further revealed that increasing tax rates was said to have triggered a positive trend towards economic growth or GDP (actual revenue collected is more than expected taxation revenue annually to cover tax evaded and avoided. As far as policy is concerned the conclusion is reassuring that tax evasion and avoidance has minimal effect upon economic growth as long as tax rates are being risen. The results of this study provide implications for government that specific insights should allow policy makers to gain a better understanding on the key variables that are potentially associated with tax evasion and avoidance. Finally, the study contributes knowledge that is pertinent to an emerging country and provides much needed insights into the magnitude of the extent of tax evasion and avoidance on the county’s economic growth progress.
The role of environmental disclosures in enhancing firm value : evidence from listed manufacturing firms
(International Institute for Science, Technology and Education, 2023-01) Mgilane, Nolwando L.; Maama, Haruna; Marimuthu, Ferina
The traditional approach to financial performance reporting has experienced a significant shift as stakeholders increasingly demand greater transparency regarding firms' environmental and social impact. This has elevated the importance of environmental reporting due to its potential influence on firms' financial strength. This study investigates the relationship between environmental reporting and the value of manufacturing firms listed on the Johannesburg Stock Exchange (JSE) in South Africa. The study conducted a content analysis on 250 annual integrated reports from 50 manufacturing firms listed on the JSE between 2016 and 2020 and utilized a multiple regression analysis. The findings revealed a negative relationship between environmental reporting and firm value, suggesting that adopting environmental reporting may involve additional financial resources, which are perceived as an outflow of funds in an economic context. Consequently, this study recommends that manufacturing companies analyse their stakeholders' characteristics and information needs to present relevant environmental reporting in their annual integrated reports. By doing so, companies can enhance their legitimacy with stakeholders, maximise shareholder value, and ultimately increase firm value. This research contributes to the existing literature on environmental, social, and financial reporting, particularly in South Africa, by focusing specifically on manufacturing firms listed on the JSE.
Impact of environmental disclosure on financial health of manufacturing firms
(Cosmos S.A., 2023) Marimuthu, Ferina; Mgilane, Nolwando; Maama, Haruna
Environmental reporting can help firms stay in compliance with environmental regulations and manage environmental risks. By proactively addressing and disclosing their environmental impact, manufacturing firms can mitigate potential legal and regulatory penalties, fines, and reputation damage, thereby safeguarding their financial performance. In addition to the latter perspective, cost savings and operational efficiency, enhanced reputation and stakeholder engagement, as well as access to capital and investment opportunities, are critical factors to ensure that firms disclose information about their environmental performance, including its impact on the environment, sustainability initiatives, and environmental risks and opportunities to ensure that they maximise their financial performance. Hence, the aim of this study is to explore the relationship between environmental reporting and financial performance of South African listed manufacturing firms. A multiple regression analysis was adopted to achieve the aim by testing the relationship between the variables amongst a sample of 50 manufacturing firms listed on the Johannesburg Stock Exchange (JSE). A content analysis was utilized to attain environmental reporting information themes from the integrated annual reports retrieved from the JSE for the period 2016 to 2020. The results indicate a negative association between environmental reporting responsibility and financial performance, measured by return on equity (ROE) when the components of environmental reporting are tested individually. However, when these components namely: environmental reporting, social reporting and environmental degradation are combined the findings reveal a positive and statistically significant relationship. These results imply that the adoption of environmental reporting, specifically an increase on the quality of environmental reporting results in an increase in the manufacturing firm performance.
The determinants of financial performance of South African state-owned entities
(PT Keberlanjutan Strategis Indonesia, 2023) Marimuthu, Ferina; Mvunabandi, Jean Damascene; Maama, Haruna
Several state-owned enterprises (SOEs) have severally faced imminent collapse, resulting in various support from the government. This has increased the debt level of the government and the SOEs. The study examined the factors that influence the financial performance of South African SOEs. This study used a quantitative methodology and secondary data of 33 South African SOEs from 1995 to 2017. The data were analysed using a multiple regression model and the GMM estimation technique. The study's conclusions show a statistically significant inverse relationship between capital structure and financial performance. The evidence further showed that government intervention in financial assistance, such as grants, funds, rebates, and subsidies, has contributed to the poor performance of SOEs. The inverse association suggests that the SOEs performance continues to worsen despite government support, which is quite concerning. The results demonstrate that government support is not a sound choice for developing SOEs since it makes management more dependent on it to meet operational needs and seize expansion possibilities. Additionally, the increased use of debt stresses government finances due to the rise in government guarantees. The study concludes that, contrary to the agency theory, leverage does not enhance SOEs' performance, suggesting they should be careful when selecting their capital structure. Finally, the South African SOEs’ performance is being hampered by government support. The findings have several policy implications for the government and the management of SOEs.
Financing of state-owned entities : can the trade-off theory explain the debt structure?
(Research Synergy Foundation, 2023) Abbana, Sharanam Sharma; Marimuthu, Ferina
The purpose of this research is to determine if the financing behaviour of South African state-owned entities (SOEs) have a target capital structure which they adjust towards and if so, the speed of adjustment, a central tenet of the Trade-off Theory. An unbalanced panel data set from a sample of thirty-three commercial SOEs were studied using a dynamic partial adjustment model. The findings provide strong evidence that South African SOEs follow the trade-off theory based on the existence of a target capital structure and speed of adjustment of 21.5% per annum towards the target which is slower than other SOEs in developing economies. The findings also revealed that these SOEs take almost five years to close off two-thirds of the gap between the actual and optimal capital structures. The findings will be of interest to observers of the economy, as they measure the capacity of SOEs to play a leading role in investment and in improving the efficiency of the economy. They could also inform decision making and policy development on SOEs.

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