Corporate governance, affirmative action and firm value in post-apartheid South Africa: a simultaneous equation approach
Corporate governance, affirmative action and firm value in post-apartheid South Africa: a simultaneous equation approach
The post-Apartheid South African (SA) corporate governance (CG) model is a unique hybridisation of the traditional Anglo-American and Continental European-Asian CG models, distinctively requiring firms to explicitly comply with a number of affirmative action and stakeholder CG provisions, such as black economic empowerment, environment, and HIV/Aids. This paper examines the association between a composite CG index and firm value in this distinct corporate setting within a simultaneous equation framework. Using a sample of 169 post-Apartheid SA firms from 2002 to 2007, we find a significant positive association between a composite CG index and firm value. Distinct from prior studies, but consistent with political cost, legitimacy and resource dependence theories, we find that compliance with affirmative action CG provisions impacts positively on firm value. The results are robust across a number of econometric models that adequately control for different types of endogeneity problems, as well as alternative accounting and market-based firm valuation measures.
University of Southampton
Ntim, Collins G.
1f344edc-8005-4e96-8972-d56c4dade46b
23 January 2010
Ntim, Collins G.
1f344edc-8005-4e96-8972-d56c4dade46b
Ntim, Collins G.
(2010)
Corporate governance, affirmative action and firm value in post-apartheid South Africa: a simultaneous equation approach
Southampton, GB.
University of Southampton
Record type:
Monograph
(Working Paper)
Abstract
The post-Apartheid South African (SA) corporate governance (CG) model is a unique hybridisation of the traditional Anglo-American and Continental European-Asian CG models, distinctively requiring firms to explicitly comply with a number of affirmative action and stakeholder CG provisions, such as black economic empowerment, environment, and HIV/Aids. This paper examines the association between a composite CG index and firm value in this distinct corporate setting within a simultaneous equation framework. Using a sample of 169 post-Apartheid SA firms from 2002 to 2007, we find a significant positive association between a composite CG index and firm value. Distinct from prior studies, but consistent with political cost, legitimacy and resource dependence theories, we find that compliance with affirmative action CG provisions impacts positively on firm value. The results are robust across a number of econometric models that adequately control for different types of endogeneity problems, as well as alternative accounting and market-based firm valuation measures.
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Published date: 23 January 2010
Organisations:
Centre of Excellence in Decision, Analytics & Risk Research, Accounting
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Local EPrints ID: 343643
URI: http://eprints.soton.ac.uk/id/eprint/343643
PURE UUID: 1b269b07-1bb4-4f43-a475-5f4ebc31689a
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Date deposited: 09 Oct 2012 15:40
Last modified: 23 Jul 2022 01:27
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