The Effect of Broad-Based Black Economic Empowerment Laws (B-BBEE) on Mutual Funds’ Performance in South Africa

Nixon S. Chekenya and Heinz Eckart Klingelhöfer ()
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Heinz Eckart Klingelhöfer: Tshwane University of Technology

Africagrowth Agenda, 2021, vol. 18, issue 4, 14-17

Abstract: While a growing body of literature examines the link between Broad- Based Black Economic Empowerment Laws (B-BBEE, popularly referred to as BEE) and firm level as well as national outcomes, still less is known about systematic differences in performance between B-BBEE-affiliated and non-B-BBEE affiliated groups. Hence, employing a panel of 3,320 B-BBEE-affiliated and 3,329 non-BBBEE affiliated funds for the period 2004 to 2016, we investigated the effect of compliance (non-compliance) with the indigenization laws on each firm’s performance and uncovered investors’ attitude towards B-BBEE laws. The study’s results challenge conventional wisdom that indigenisation laws affect business operations in South Africa. The idea, widely held, that B-BBEE policy is a block to foreign investment is without statistical backing.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journ2:v:18:y:2021:i:4:p:14-17

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