Abstract
M.Com. (Financial Management)
Globally and locally, extensive research has been conducted on the relationship between gender and racial diversity and the financial performance of organisations. The focus of these studies has been listed companies. Limited research exists on the relationship between gender and racial diversity and financial performance of state-owned entities (SOEs).
Existing studies have mainly centred on quantitative methods, using correlation and regression analysis techniques to explore the relationship. The majority of the findings have been inconsistent and therefore inconclusive.
This study first determined how well the South African government, as the author of the Employment Equity Act of 1998, diversified or transformed the executive management team of its SOEs. The study then established how this diversity or transformation affected the entities’ financial performance.
The study used comparison and regression analysis techniques and the findings were in line with most of the outcomes of previous studies. During the period under review (2010 to 2014), little progress was made by the South African government in transforming its executive management teams within SOEs. Furthermore, there has been an insignificant relationship between management diversity of executive management teams and the financial performance of these SOEs.
These findings are significant for South African regulators as they provide justification for increased efforts to transform or diversify the South African executive management teams in SOEs, particularly since numerous studies have proven that this transformation can be financially beneficial.