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Black Economic Empowerment, Legitimacy, and the Value Added Statement: Evidence from Post-Apartheid South Africa
Steven F Cahan,
University of Auckland
Chris J Van Staden, Massey University
ABSTRACT. We examine why companies in South Africa voluntarily provide a value added statement (VAS). Because the VAS is viewed as a tool that management can use to communicate with employees, we are able to examine whether production of a VAS is associated with actual performance in labour-related areas. To measure labour-related performance, we use an independent ranking, published in South Africa, that rates companies based on their performance in response to the South African government’s black economic empowerment (BEE) program. We find that BEE performance is significantly and positively related to the production of a VAS. In fact, in our multivariate tests, it is the most significant of any of the nine independent variables that we consider. We interpret this as evidence that publishing a VAS is one element of a broader strategy used by South African companies to gain and maintain substantive legitimacy.
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