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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Corporate governance, affirmative action and firm value in post-apartheid South Africa: a simultaneous equation approach
Author:Ntim, Collins G.
Year:2013
Periodical:African Development Review (ISSN 1467-8268)
Volume:25
Issue:2
Pages:148-172
Language:English
Geographic term:South Africa
Subjects:enterprises
business organization
management
affirmative action
economic models
External link:https://onlinelibrary.wiley.com/doi/10.1111/j.1467-8268.2013.12021.x/pdf
Abstract:The post-apartheid South African corporate governance (CG) model is a unique hybridization 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, employment equity, environment, HIV/AIDS, and health and safety. 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 post-apartheid South African listed corporations, and controlling for potential interdependencies among block ownership, board size, leverage, institutional ownership, firm value and a broad CG index, the author finds a significant positive association between a composite CG index and firm value. Further, two-stage least squares results show that there is also a reverse association between broad CG index and firm value, emphasizing the need for future research to adequately control for potential interrelationships between possible alternative CG mechanisms and firm value. Distinct from prior studies, the author finds that compliance with affirmative action CG provisions impacts positively on firm value. These results are consistent with agency, legitimacy, political cost, and resource dependent theoretical predictions. App., bibliogr., notes, sum. [Journal abstract]
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