Non - Financial Disclosures in the South African Mining Industry

Abstract

The purpose of this article is to analyse the nature and extent of non-financial disclosures in South African mining companies' annual reports both pre-and post-King III to explore the impact that King III may have had on such disclosures. The research methodology adopted was a content analysis of annual reports prior to the issue of King III and then, in order to provide a second benchmarking period, more recent studies of mining companies' annual reports after the issue of King III were accessed. These studies also used content analysis allowing for some degree of comparability. The study found that overall, the non-financial disclosures for all mining companies showed an increasing trend for the years leading up to the issue of King III. After the release of King III, the study found that although the extent of disclosures increased further, pointing to King III being the impetus for such an increase, there was still room for improvement in corporate governance disclosures especially with regards to forward looking disclosures and board of directors' disclosures.

Early adopters of integrated reporting: The case of the mining industry in South Africa

“…It has the world"s largest reserves of chrome, gold, vanadium, manganese and PGMs (platinum group metals) and accounts for nearly all of Africa"s metals and mineral production (Burger, 2006). According to White (1995) and Stainbank (2012), the mineral extraction and processing industry is the most dominant industry in the South African economy in that it contributes a substantial amount to its export earnings and opens employment opportunities that are crucial to South Africa"s economic and social concerns. In addition, due to their impact on the natural environment, mining companies are under close watch by environ-mental groups and society at large.…”

“…There are many mining companies in emerging countries looking to Western stock exchanges to find markets for their stocks (Smith and Mokgoatlheng, 2003). Because the South African mining industry is in an emerging country, it may need to improve its non-financial disclosures to compete globally and meet the expectations of potential investors (Atkins and Maroun, 2015;Stainbank, 2012;PWC, 2013).…”

“…Non-financial disclosure is especially remarkable because it provides different stakeholders with information that financial reporting alone fails to provide (White, 2005). Stakeholder theory emphasizes the need for an organization to identify powerful stakeholders (Stainbank, 2012) to which it is accountable and to maintain a good relationship with these stakeholders, which could include voluntarily disclosing information (Deegan et al, 2000;Newson and Deegan, 2002;Van Staden, 2003;Gray et al, 2014).…”

“…The previous content analysis studies based on companies" annual reports within the mining industry have mainly focused on environmental and social disclosures (de Villiers and Barnard, 2000;de Villiers and Lubbe, 2001;Jenkins and Yakovleva, 2006;Kemp et al, 2010;Fonseca et al, 2014;Maubane et al, 2014;Lodhia and Martin, 2014;, sustainable management practices (Maffini et al, 2015), IC measurements and reporting (April et al, 2003), voluntary disclosures (Stainbank, 2012) and risk disclosures. If we shift from content analysis studies based on traditional corporate reporting to content analysis studies based on IR, we find that few studies have attempted to explore the disclosures and practices of the first adopters of IR (Wild and van Staden, 2015) in the mining sector (Hindley and Buys, 2012;Carels et al, 2013).…”

“…The empirical research sought to make a benchmarking analysis between the mining companies referring to both the amount and the themes of the information disclosed by the firms (Stainbank, 2012). An assessment of the degree of the companies" compliance with reference to the guidelines required by the above-listed documents will be formulated by means of a disclosure checklist ( Table 5).…”