Research Article
BibTex RIS Cite

THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?

Year 2020, Volume: 12 Issue: 1, 50 - 65, 19.02.2020

Abstract

King Committee published the first King Report on corporate governance in 1994. The King II and III Reports, implemented in 2002 and 2010 respectively, placed progressively more emphasis on proper disclosure of corporate governance practices. King IV, published in 2016, strives to encourage management to focus on governance and not regard it as mindless compliance. Different stakeholders raised concerns that the continued corporate scandals could be, on a large scale, attributed to shortcomings in corporate governance practices. One of the objectives of King IV is to promote corporate governance as an integral part of effective management.
The aim of this study is to assess whether the disclosure on governance, by selected Johannesburg Stock Exchange (JSE)-listed companies, is sufficient to confirm to users of financial statements that sound corporate governance is a priority in these companies. A documentary review of the latest governance reports of these companies was done to evaluate compliance with the King IV principles in general.
The results indicated that all of these companies disclosed that they are in general complying with the 17 principles of King IV; however, the ongoing global and local corporate failures may be an indication that sound corporate governance is not a priority, but is still dealt with as a “tick-box” exercise.
The recommendation from this study is that boards of directors should be held accountable for setting practices and strategies that are aligned with the King codes, to ensure effective management and control of business entities.

References

  • Abor, J., and Adjasi, C. K. (2007). Corporate governance and the small and medium enterprises sector: theory and implications. Corporate governance, 7(2), 111-122. Bachmann, R., Ehrlich. G., Fan, Y. & Ruzic, D. (2019). Firms and collective reputation: a study of the Volkswagen emissions scandal. Working paper 26117, National Bureau of economic research, Cambridge. http://www.nber.org/papers/. Accessed 2019/08/28. Business Tech. (2017). The Biggest Companies in South Africa by Market Cap. https://businesstech.co.za/news/business//164635/the-biggest-companies-in-south-africa-by-market-cap/. Accessed 2019/08/27. Canter, A. (2018). SA counts costs of poor governance. Mail and guardian. https://mg.co.za/article/2018-03-02-00-sa-counts-cost-of-poor-governance. Accessed 2019/07/21. Department of Health, Republic of South Africa, (2018). Listeriosis outbreak emergency response plan, http://www.health.gov.za/index.php/component/phocadownload/category/439. Accessed 2019/07/21. Hunter-Adams, J., Battersby, J. and Oni, T. (2018) Fault lines in food system governance exposed: reflections from the listeria outbreak in South Africa, Cities & Health, 2:1, 17-21. IFC, (2013). Corporate Governance. Key Highlights of 2013. https://www.ifc.org/wps/wcm/connect/b9d57f80437ee53f8d60bd869243d457/CG+Key+Highlights+2013.pdf?MOD=AJPERES. Accessed on 6.7.2019. Investor-Words, (2008). Market Capitalization: Definition. Retrieved from http://www.investorwords.com/2969/market_capitalization.html. Accessed 2019/07/06. IODSA (Institute of Directors in Southern Africa). (2002). Executive summary of the King report 2002. https://bit.ly/2IzVogm. Accessed 2019/07/18. IODSA (Institute of Directors in Southern Africa. (2002). King Report on corporate governance for South Africa 2002. http://library.ufs.ac.za/dl/userfiles/documents/Information_Resources/KingII%20Final%20doc.pdf. Accessed 2019/07/06. IODSA (Institute of Directors in Southern Africa). (2009), King report on corporate governance for South Africa 2009, http://c.ymcdn.com/sites/www.iodsa.co.za/resource/resmgr/king_iii/King_Report_on_Governance_fo.pdf. Accessed 2019/07/06. IODSA (Institute of Directors in Southern Africa). (2016), Report on corporate governance for South Africa 2016, https://c.ymcdn.com/sites/iodsa.site-ym.com/resource/collection/684B68A7-B768-465C-8214-E3A007F15A5A/IoDSA_King_IV_Report_-_WebVersion.pdf. Accessed 2019/07/06. IODSA (institute of Directors in Southern Africa). (2018), Understanding King IV and what it is intended to achieve, https://www.iodsa.co.za/news/389613/Understanding-King-IV-and-what-it-is-intended-to-achieve.htm. Accessed 2019/07/05. JSE. (2011). JSE Limited listing requirements. https://www.jse.co.za/content/JSEAnnouncementItems/Service%20Issue% 2014(2).pdf. Accessed 2019/07/15. JSE. (2017). Amendments to the JSE Limited listing requirements: Part 1 of 2016. https://www.jse.co.za/content/JSEAnnouncementItems/20170522-JSE%20Letter%20Implementation%20May%202017.pdf . Accessed 2019/07/19. Kirkpatrick, G. (2009). The Corporate governance lessons from the financial crisis. Financial Market trends – ISSN 199 – 2864, Vol. 2009/1. Konstans, C., Radhakrishnan, S., Switzer, C.S & Williams, L.C. (2011). In Search of ‘Principled’ Performance. (cover story). Financial Executive, 27(10), 55-57. Khoo, S.S. (2019). "Tobin's Q of Honda Motor Company, Limited and its Determinants from 2013 to 2017," MPRA Paper 93879, University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/93879/. Accessed 2019/08/27. Madigan, V. (2018). The importance of diversity of perspective on boards. http://www.mondaq.com/ireland/x/694462/Corporate+Governance/The+Importance+of+Diversity+of+Perspective+on+Boards. Accessed 2019/07/15. Manganye, D. (2019) What happens when the board fails the business? https://www.itweb.co.za/content/PmxVEMKXRDPqQY85. Accessed 2019/07/19. Matussek, K. (2018) VW fights investors as diesel-scandal cost could top $35bn. Business report, 10/9/2019. https://www.iol.co.za/business-report/international/vw-fights-investors-as-diesel-scandal-cost-could-top-35bn-16977770. Accessed 2019/08/28. Modiha, E. 2018. Identifying the challenges to implement King IV in Chapter 9 and public sector institutions. North-West University. (Mini-dissertation – MBA). Natesan, P and Du Plessis, P. (2019). Why King IV’s “apply and explain” is so important. Institute of Directors of South Africa. https://www.iodsa.co.za/news/438882/Why-King-IVs-apply-and-explain-is-so-important.htm Accessed 2019/07/19 Naudé, P., Hamilton, B., Ungerer, M., Malan, D. and De Klerk, M. (2018). Business perspectives of the Steinhoff saga. University of Stellenbosch business school, special report June 2018. https://www.usb.ac.za/usb_reports/steinhoff-saga/. Accessed 2019/07/21. OECD (Organisation for Economic Co-operation and Development), (2014), Risk Management and Corporate Governance, Corporate Governance, OECD. Publishing. http://www.oecd.org/daf/ca/risk-management-corporate-governance.pdf .Accessed 2019/07/04. OECD (Organisation for Economic Co-operation and Development), (2017). Improving business behaviour: Why we need corporate governance, OECD, http://www.oecd.org/daf/ca/corporategovernanceprinciples/improvingbusinessbehaviourwhyweneedcorporategovernance.htm. Accessed 2019/07/04. PWC, (2016). King IV Steering point – A summary of the King IV report on corporate governance in South Africa. https://www.pwc.co.za/en/publications/king4.html. Accessed 2019/07/20. Rossouw, J. and Styan, J. (2019). Steinhoff collapse: a failure of corporate governance. International review of applied economics. 33(1), 163-170. SAICA, (2013). King Report on Corporate Governance. https://www.saica.co.za/Technical/LegalandGovernance/King/tabid/2938/language/en-ZA/Default.aspx . Accessed 2019/07/05. SHARENET, (July 2019) Top 100 JSE listed companies by market capital. http://www.sharenet.co.za/index.phtml?content=/free/topco.phtml. Accessed 2019/07/05. Steinhoff, (2016), Annual report 2016 - Steinhoff International Holdings N.V., 28 Swart, JJ. 2018. Audit Methodologies: Developing an integrated planning model incorporating audit materiality, risk and sampling. Vanderbijlpark: NWU. (Thesis - PhD). Tiger Brands, (2017), Tiger Brands Integrated Annual report 2017, 70-82. http://www.tigerbrands-online.co.za/reports/ir-2017/downloads.php. Accessed 2019/07/21. Tongaat, (2019), SENS Tongaat Huletts, http://www.tongaat.com/investors/sens/. Accessed 2019/07/21. Van Vuuren, Janse H. H. (2006). Disclosing risk management policies in financial statements (Masters Dissertation, North-West University, Vanderbijlpark). Van Vuuren, Janse H. H. (2016). Risk management disclosure practices in accordance with King II and King III: The case of selected JSE listed companies. International Journal of Economics and Finance studies. 8(1), 159-174, ISSN:1309-8055 (Online).
Year 2020, Volume: 12 Issue: 1, 50 - 65, 19.02.2020

Abstract

References

  • Abor, J., and Adjasi, C. K. (2007). Corporate governance and the small and medium enterprises sector: theory and implications. Corporate governance, 7(2), 111-122. Bachmann, R., Ehrlich. G., Fan, Y. & Ruzic, D. (2019). Firms and collective reputation: a study of the Volkswagen emissions scandal. Working paper 26117, National Bureau of economic research, Cambridge. http://www.nber.org/papers/. Accessed 2019/08/28. Business Tech. (2017). The Biggest Companies in South Africa by Market Cap. https://businesstech.co.za/news/business//164635/the-biggest-companies-in-south-africa-by-market-cap/. Accessed 2019/08/27. Canter, A. (2018). SA counts costs of poor governance. Mail and guardian. https://mg.co.za/article/2018-03-02-00-sa-counts-cost-of-poor-governance. Accessed 2019/07/21. Department of Health, Republic of South Africa, (2018). Listeriosis outbreak emergency response plan, http://www.health.gov.za/index.php/component/phocadownload/category/439. Accessed 2019/07/21. Hunter-Adams, J., Battersby, J. and Oni, T. (2018) Fault lines in food system governance exposed: reflections from the listeria outbreak in South Africa, Cities & Health, 2:1, 17-21. IFC, (2013). Corporate Governance. Key Highlights of 2013. https://www.ifc.org/wps/wcm/connect/b9d57f80437ee53f8d60bd869243d457/CG+Key+Highlights+2013.pdf?MOD=AJPERES. Accessed on 6.7.2019. Investor-Words, (2008). Market Capitalization: Definition. Retrieved from http://www.investorwords.com/2969/market_capitalization.html. Accessed 2019/07/06. IODSA (Institute of Directors in Southern Africa). (2002). Executive summary of the King report 2002. https://bit.ly/2IzVogm. Accessed 2019/07/18. IODSA (Institute of Directors in Southern Africa. (2002). King Report on corporate governance for South Africa 2002. http://library.ufs.ac.za/dl/userfiles/documents/Information_Resources/KingII%20Final%20doc.pdf. Accessed 2019/07/06. IODSA (Institute of Directors in Southern Africa). (2009), King report on corporate governance for South Africa 2009, http://c.ymcdn.com/sites/www.iodsa.co.za/resource/resmgr/king_iii/King_Report_on_Governance_fo.pdf. Accessed 2019/07/06. IODSA (Institute of Directors in Southern Africa). (2016), Report on corporate governance for South Africa 2016, https://c.ymcdn.com/sites/iodsa.site-ym.com/resource/collection/684B68A7-B768-465C-8214-E3A007F15A5A/IoDSA_King_IV_Report_-_WebVersion.pdf. Accessed 2019/07/06. IODSA (institute of Directors in Southern Africa). (2018), Understanding King IV and what it is intended to achieve, https://www.iodsa.co.za/news/389613/Understanding-King-IV-and-what-it-is-intended-to-achieve.htm. Accessed 2019/07/05. JSE. (2011). JSE Limited listing requirements. https://www.jse.co.za/content/JSEAnnouncementItems/Service%20Issue% 2014(2).pdf. Accessed 2019/07/15. JSE. (2017). Amendments to the JSE Limited listing requirements: Part 1 of 2016. https://www.jse.co.za/content/JSEAnnouncementItems/20170522-JSE%20Letter%20Implementation%20May%202017.pdf . Accessed 2019/07/19. Kirkpatrick, G. (2009). The Corporate governance lessons from the financial crisis. Financial Market trends – ISSN 199 – 2864, Vol. 2009/1. Konstans, C., Radhakrishnan, S., Switzer, C.S & Williams, L.C. (2011). In Search of ‘Principled’ Performance. (cover story). Financial Executive, 27(10), 55-57. Khoo, S.S. (2019). "Tobin's Q of Honda Motor Company, Limited and its Determinants from 2013 to 2017," MPRA Paper 93879, University Library of Munich, Germany. https://mpra.ub.uni-muenchen.de/93879/. Accessed 2019/08/27. Madigan, V. (2018). The importance of diversity of perspective on boards. http://www.mondaq.com/ireland/x/694462/Corporate+Governance/The+Importance+of+Diversity+of+Perspective+on+Boards. Accessed 2019/07/15. Manganye, D. (2019) What happens when the board fails the business? https://www.itweb.co.za/content/PmxVEMKXRDPqQY85. Accessed 2019/07/19. Matussek, K. (2018) VW fights investors as diesel-scandal cost could top $35bn. Business report, 10/9/2019. https://www.iol.co.za/business-report/international/vw-fights-investors-as-diesel-scandal-cost-could-top-35bn-16977770. Accessed 2019/08/28. Modiha, E. 2018. Identifying the challenges to implement King IV in Chapter 9 and public sector institutions. North-West University. (Mini-dissertation – MBA). Natesan, P and Du Plessis, P. (2019). Why King IV’s “apply and explain” is so important. Institute of Directors of South Africa. https://www.iodsa.co.za/news/438882/Why-King-IVs-apply-and-explain-is-so-important.htm Accessed 2019/07/19 Naudé, P., Hamilton, B., Ungerer, M., Malan, D. and De Klerk, M. (2018). Business perspectives of the Steinhoff saga. University of Stellenbosch business school, special report June 2018. https://www.usb.ac.za/usb_reports/steinhoff-saga/. Accessed 2019/07/21. OECD (Organisation for Economic Co-operation and Development), (2014), Risk Management and Corporate Governance, Corporate Governance, OECD. Publishing. http://www.oecd.org/daf/ca/risk-management-corporate-governance.pdf .Accessed 2019/07/04. OECD (Organisation for Economic Co-operation and Development), (2017). Improving business behaviour: Why we need corporate governance, OECD, http://www.oecd.org/daf/ca/corporategovernanceprinciples/improvingbusinessbehaviourwhyweneedcorporategovernance.htm. Accessed 2019/07/04. PWC, (2016). King IV Steering point – A summary of the King IV report on corporate governance in South Africa. https://www.pwc.co.za/en/publications/king4.html. Accessed 2019/07/20. Rossouw, J. and Styan, J. (2019). Steinhoff collapse: a failure of corporate governance. International review of applied economics. 33(1), 163-170. SAICA, (2013). King Report on Corporate Governance. https://www.saica.co.za/Technical/LegalandGovernance/King/tabid/2938/language/en-ZA/Default.aspx . Accessed 2019/07/05. SHARENET, (July 2019) Top 100 JSE listed companies by market capital. http://www.sharenet.co.za/index.phtml?content=/free/topco.phtml. Accessed 2019/07/05. Steinhoff, (2016), Annual report 2016 - Steinhoff International Holdings N.V., 28 Swart, JJ. 2018. Audit Methodologies: Developing an integrated planning model incorporating audit materiality, risk and sampling. Vanderbijlpark: NWU. (Thesis - PhD). Tiger Brands, (2017), Tiger Brands Integrated Annual report 2017, 70-82. http://www.tigerbrands-online.co.za/reports/ir-2017/downloads.php. Accessed 2019/07/21. Tongaat, (2019), SENS Tongaat Huletts, http://www.tongaat.com/investors/sens/. Accessed 2019/07/21. Van Vuuren, Janse H. H. (2006). Disclosing risk management policies in financial statements (Masters Dissertation, North-West University, Vanderbijlpark). Van Vuuren, Janse H. H. (2016). Risk management disclosure practices in accordance with King II and King III: The case of selected JSE listed companies. International Journal of Economics and Finance studies. 8(1), 159-174, ISSN:1309-8055 (Online).
There are 1 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Research Article
Authors

Heleen Janse Van Vuuren This is me

Publication Date February 19, 2020
Published in Issue Year 2020 Volume: 12 Issue: 1

Cite

APA Janse Van Vuuren, H. (2020). THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?. International Journal of Business and Management Studies, 12(1), 50-65.
AMA Janse Van Vuuren H. THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?. IJBMS. February 2020;12(1):50-65.
Chicago Janse Van Vuuren, Heleen. “THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?”. International Journal of Business and Management Studies 12, no. 1 (February 2020): 50-65.
EndNote Janse Van Vuuren H (February 1, 2020) THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?. International Journal of Business and Management Studies 12 1 50–65.
IEEE H. Janse Van Vuuren, “THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?”, IJBMS, vol. 12, no. 1, pp. 50–65, 2020.
ISNAD Janse Van Vuuren, Heleen. “THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?”. International Journal of Business and Management Studies 12/1 (February 2020), 50-65.
JAMA Janse Van Vuuren H. THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?. IJBMS. 2020;12:50–65.
MLA Janse Van Vuuren, Heleen. “THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?”. International Journal of Business and Management Studies, vol. 12, no. 1, 2020, pp. 50-65.
Vancouver Janse Van Vuuren H. THE DISCLOSURE OF CORPORATE GOVERNANCE: A TICK-BOX EXERCISE OR NOT?. IJBMS. 2020;12(1):50-65.