Black Economic Empowerment, Legitimacy and the Value Added Statement: Evidence from Post-Apartheid South Africa

22 Pages Posted: 31 Jan 2009

See all articles by Steven F. Cahan

Steven F. Cahan

University of Auckland Business School

Chris J. van Staden

Independent

Abstract

We examine why companies in South Africa voluntarily provide a value added statement (VAS). The VAS can be used by management to communicate with employees and thereby establish a record of legitimacy. Since we want to establish if the VAS is used to establish symbolic or substantive legitimacy, we examine whether production of a VAS is associated with actual performance in labour-related areas. To measure labour-related performance, we use an independent Black Economic Empowerment (BEE) rating. We find that BEE performance is significantly and positively related to the voluntary publication of a VAS. Our results suggest that BEE performance and disclosure of a VAS are two elements of a strategy used by South African companies to establish their substantive legitimacy with labour.

Suggested Citation

Cahan, Steven F. and van Staden, Christiaan J., Black Economic Empowerment, Legitimacy and the Value Added Statement: Evidence from Post-Apartheid South Africa. Accounting & Finance, Vol. 49, No. 1, pp. 37-58, March 2009, Available at SSRN: https://ssrn.com/abstract=1335566 or http://dx.doi.org/10.1111/j.1467-629X.2008.00280.x

Steven F. Cahan (Contact Author)

University of Auckland Business School ( email )

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Private Bag 92019
Auckland, 1010
New Zealand

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