Scielo RSS <![CDATA[South African Journal of Economic and Management Sciences ]]> http://www.scielo.org.za/rss.php?pid=2222-343620090002&lang=es vol. 12 num. 2 lang. es <![CDATA[SciELO Logo]]> http://www.scielo.org.za/img/en/fbpelogp.gif http://www.scielo.org.za <![CDATA[<b>Measuring the welfare cost of inflation in South Africa: A reconsideration</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200001&lng=es&nrm=iso&tlng=es In this paper, using the Fisher and Seater (1993) long-horizon approach, the writers estimate the long-run equilibrium relationship between money balance as a ratio of income and the Treasury bill rate for South Africa over the period 1965:02 to 2007:01, and, in turn, use the obtained estimates of the interest elasticity and the semi-elasticity to derive the welfare cost estimates of inflation, using both Bailey's (1956) consumer surplus approach and Lucas's (2000) compensating variation approach. When the results are compared to welfare cost estimates obtained recently by Gupta and Uwilingiye (2008), using the same data set, but basing it on Johansen's (1991, 1995) cointegration technique, the values are less than half of those obtained in the latter study. These range from 0.16 percent to 0.36 percent of GDP for the target-band of three percent to six percent of inflation. The paper thus highlights the fact that welfare cost estimates of inflation are sensitive to the methodology used to estimate the long-run equilibrium money demand relationships. <![CDATA[<b>IAS15 inflation adjustments and EVA: Empirical evidence from a highly variable inflation regime</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200002&lng=es&nrm=iso&tlng=es Inflation can have a pronounced effect on the financial performance of a firm. This study makes inflation adjustments to a firm's cost of sales, depreciation, level of gearing and assets in line with International Accounting Standard 15 (IAS15) in order to calculate an inflation-adjusted version of the economic value added (EVA) measure. The study was conducted using data from South African industrial firms during a period characterised by highly variable inflation levels (1991-2005). The results indicate that during this period there were significant differences between the nominal and real values of the firms' EVAs. <![CDATA[<b>The term structure of interest rates and inflation forecast targeting</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200003&lng=es&nrm=iso&tlng=es This paper examines the implications of the expectations theory of the term structure of interest rates for the implementation of inflation targeting. We show that the responsiveness of the central bank's instrument to the underlying state of the economy is increasing in the duration of the long-term bond. On the other hand, an increase in duration will make long-term inflationary expectations - and therefore also the long-term nominal interest rate - less responsive to the state of the economy. The extent to which the central bank is concerned with output stabilisation will exert a moderating influence on the central bank's response to leading indicators of future inflation. However, the effect of an increase in this parameter on the long-term nominal interest rate turns out to be ambiguous. Next, we show that both the sensitivity of the nominal term spread to economic fundamentals and the extent to which the spread predicts future output, are increasing in the duration of the long bond and the degree of structural output persistence. However, if the central bank becomes relatively less concerned about inflation stabilisation the term spread will be less successful in predicting real economic activity. <![CDATA[<b>Corporate social responsibility: The financial impact of Black Economic Empowerment transactions in South Africa</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200004&lng=es&nrm=iso&tlng=es Corporate social responsibility (CSR) has recently received considerable attention in literature. One of the vehicles by which companies can conform to CSR in South Africa is Black Economic Empowerment (BEE). In this regard, BEE has been employed to assist previously disadvantaged groups of investors obtain a larger share of the equity of South African listed companies. The question has often been asked whether the announcement of BEE transactions by listed companies increases shareholder wealth. This article tries to answer this question by examining the share performance of 125 BEE transactions involving 95 companies during the period January 2002 to July 2006. The results indicate a positive relation between BEE transaction announcements and shareholder wealth creation, but only during the last part of the period covered by the study. <![CDATA[<b>Core corporate governance dilemmas facing boards: A South African perspective</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200005&lng=es&nrm=iso&tlng=es Directors and boards face many challenges in terms of managing complexity. A key factor of success in practising good corporate governance is the board's ability to cope with paradox. The purpose of this research has been to explore the core corporate governance dilemmas facing boards. The investigation was qualitative in nature using the Delphi technique. Six core corporate governance dilemmas facing board members were identified one of which is not mentioned in the international literature. The findings should provide directors with an ability to identify the nature of the paradoxes to which they need to respond. <![CDATA[<b>Using an inflation-augmented price-earnings ratio to guide tactical asset allocation</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200006&lng=es&nrm=iso&tlng=es Asset allocation plays a central role in determining investment outcomes, and available evidence shows that portfolio results can be enhanced through tactical asset allocation if managers use the simple price-earnings ratio as a predictor of equity returns. Recently, some international evidence has emerged which shows that, by augmenting the price-earnings metric with information about consumer price inflation, further enhancements can be achieved in tactical asset allocation. This study reviews these arguments as they apply to South Africa, and finds that an inflation-augmented price-earnings ratio is more successful in forecasting equity returns than is the simple price-earnings ratio. Moreover, the metric is found to be significant in explaining relative asset class returns. On a risk-adjusted basis, however, the tool fails to improve the portfolio results when compared to a buy-and-hold strategy. <![CDATA[<b>Addressing the need for a Clean Development Mechanism (CDM) specific project management strategy</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200007&lng=es&nrm=iso&tlng=es Clean Development Mechanism (CDM) projects have additional technical, financial and regulatory requirements that are not fully addressed by classic project management approaches. Research has been done on individual novel concepts of the CDM, like additionality, but little has been achieved to address an overall CDM project management approach. CDM and project management literature were reviewed and the South African CDM Industry Association was used as a case study to gain insight into an appropriate CDM specific project management strategy. A stage-gate model was subsequently derived to align classic project management approaches with the additional requirements of CDM projects. Further research will, in time, determine the completeness and practicability of the proposed model. <![CDATA[<b>Direct use values of selected vegetation resources in the Okavango Delta Wetland</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200008&lng=es&nrm=iso&tlng=es The economic benefits generated by wetlands and the costs associated with their degradation or loss are frequently overlooked. This often leads to decisions that stimulate wetland conversion and degradation. An important step towards correcting this situation and countering this neglect is to establish the true values of a wetland's ecosystem goods and services. This study attempts to estimate the direct use values of native plants, such as palm leaves for basketry, grass for thatching, fuelwood, edible fruits and plant parts used by three villages adjacent to the Okavango Delta during the 2003 calendar year. Other sources of ecosystem goods and services, such as fishing, floodplain farming and tourism, were not considered in this study. The average annual value per household of these harvested resources is generally higher than that of similar resources found in other southern African wetlands, owing to higher consumption rates. The overall total direct use value of plant resources, including household income contributions "in kind", was estimated at US$1 434 per household for 2003 (or US$43.41/ha). This value is almost equal to the average household financial income of US$1 416/year. The net present value of the overall benefit from the direct use of the vegetative resources is estimated at US$101.9 million. This clearly indicates the value of the use of natural resources and their contribution to livelihoods and quality of life. This value is so significant that economic development planners ought to incorporate it into development planning. They should not conceive infrastructure development that would jeopardise the communities' access to these natural resources without any well-developed mitigation strategy. <![CDATA[<b>Determining the negative effect on house values of proximity to a landfill site by means of an application of the hedonic pricing method</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S2222-34362009000200009&lng=es&nrm=iso&tlng=es This study applied the hedonic pricing method to determine whether a disused, solid waste landfill site has an adverse effect on the prices of low-cost houses in New Brighton, a neighbourhood of the Nelson Mandela Metropole, Eastern Cape, South Africa. The results of the study show that the landfill site has a negative effect on New Brighton house prices. The average increase in house value is R36.00 per one hundred metres from the landfill site. This increase amounts to 0.44 percent of the value of a house per 100 metres from the landfill. When the change in value is summed for all the properties in the sample area (allowing for variation in value change due to differing distances from the landfill site) the total disamenity effect of the landfill site is approximately R1.4 million.