This study examines the relationship between corporate governance mechanisms and company performance as measured by economic value added (EVA), return on assets (ROA) and Tobin's Q. A multiple regression model is used to compare the association between corporate governance mechanisms and company performance for 158 companies listed on the JSE Securities Exchange (formerly known as the Johannesburg Stock Exchange) for the year 2012. We report four main results. First, board size is found to be negatively and significantly related to EVA suggesting that firms with smaller boards perform better than those with larger boards. Second, the relationship between Tobin's Q and the proportion of non-executive directors (NEDs) on the board is both positive and significant, suggesting that companies with higher proportions of NEDs seem to perform better than those with lower proportions of NEDs. Third, frequency of board meetings is negatively and significantly related to both the ROA and the Tobin's Q suggesting that companies which hold board meetings less frequently appear to perform better than those holding board meetings more frequently. Fourth, the relationship between company size and two performance measures (EVA and ROA) is both positive and significant, suggesting that larger companies seem to perform better than smaller ones. Furthermore, the association between leverage and the ROA is negative and marginally significant, suggesting that companies with less debt appear to perform better than those with more debt. Overall, based on the number and strength of associations between board characteristics and the measures of performance, we conclude that Tobin's Q has a better association with board characteristics than both EVA and ROA. The study also shows that the majority of firms listed on the JSE comply with the King III propositions that the majority of board members be NEDs and that the majority of the NEDs be independent.

We examine the relative and incremental value relevance of inflation-adjusted (IA) and historical cost (HC) amounts in a hyperinflationary economy. Using an innovative setting and a unique dataset drawn from annual reports of firms listed on the Zimbabwe Stock Exchange for the 2000-2005 period, we find that both sets of amounts are value relevant, but HC amounts are superior to IA amounts. We also show that inflation gains and losses provide incremental information content beyond that provided by the HC amounts and that the power of this incremental content model is equivalent to that of the HC model but superior to that of the IA model. Furthermore, we find that during the period of relatively low inflation, HC amounts are more value relevant than IA amounts, but the differences are less discernible during the period of relatively high inflation. Our analyses further show that the value relevance of both IA and HC amounts increases with the inflation rate, but the increase is greater for IA amounts. Finally, we show that HC amounts have a greater ability to predict future cash flows than IA amounts, which suggests that the superiority of the value relevance of HC amounts relative to that of IA amounts stems from their ability to predict future cash flows. Overall, our results suggest that in periods of relatively low inflation, HC amounts are more value relevant, while in periods of relatively high inflation, the two sets of amounts are equally value relevant and provide incremental information beyond that provided by the other.

We examine the relative and incremental value relevance of inflation-adjusted (IA) and historical cost (HC) amounts in a hyperinflationary economy. Using an innovative setting and a unique dataset drawn from annual reports of firms listed on the Zimbabwe Stock Exchange for the 2000-2005 period, we find that both sets of amounts are value relevant, but HC amounts are superior to IA amounts. We also show that inflation gains and losses provide incremental information content beyond that provided by the HC amounts and that the power of this incremental content model is equivalent to that of the HC model but superior to that of the IA model. Furthermore, we find that during the period of relatively low inflation, HC amounts are more value relevant than IA amounts, but the differences are less discernible during the period of relatively high inflation. Our analyses further show that the value relevance of both IA and HC amounts increases with the inflation rate, but the increase is greater for IA amounts. Finally, we show that HC amounts have a greater ability to predict future cash flows than IA amounts, which suggests that the superiority of the value relevance of HC amounts relative to that of IA amounts stems from their ability to predict future cash flows. Overall, our results suggest that in periods of relatively low inflation, HC amounts are more value relevant, while in periods of relatively high inflation, the two sets of amounts are equally value relevant and provide incremental information beyond that provided by the other.