Abstract
This study examines the correlation between the profitability of firms listed at the Johannesburg Stock Exchange (JSE), which operates in the financial services industry, and compliance with the Broad-Based Black Economic Empowerment (B-BBEE) Act for a period between 2019 and 2022. The study used panel data estimation approaches, and the best-fit model for data interpretation was the Pooled Ordinary Least Squares (OLS) model. The study's main findings revealed that compliance with B-BBEE had no significant effect on profitability, with weak and negative correlation between the variables. Despite this negative and insignificant relationship, the study underscores the importance of critically evaluating B-BBEE compliance efforts concerning financial returns. Policy recommendations emphasise the need for directors and shareholders to approach B-BBEE compliance intentionally, integrating it into firms' strategic objectives and ensuring continuous monitoring and evaluation of the B-BBEE initiatives. Additionally, this study encourages directors and shareholders to collaborate with policymakers to address sector-specific challenges. The study faced data availability and sample size limitations, suggesting the need for further research on individual scorecard elements and alternative methodological approaches to provide deeper insights.