Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Material Efficiency and Financial Performance: A Case of Firms Listed on the Johannesburg Stock Exchange, South Africa

Author(s): Obey Dzomonda, Olawale Fatoki

This study aimed to assess the link between material efficiency and financial performance of firms listed on the Johannesburg Stock Exchange. Existing empirical literature about material efficiency and its effect on firm success is seemingly sparse from both a developed country and developing countries’ perspective. This study was quantitative in nature and it employed a case study research design. A longitudinal design was also used where secondary data spanning from 2011-2018 was collected from sustainability reports. The sample consisted of 16 firms listed on the FTSE/JSE Responsible Investment Index top 30. Data was analyzed using panel regression. Specifically, the feasible generalized least squares was used. Interestingly, the relationship between material efficiency and ROE was found to be significant at 5% significance level. The findings also showed that the relationship between material efficiency and the Tobin’s Q was significant at 5% significance level. The findings of this paper can assist managers of listed firms to design corporate policies which promotes material efficiency and environmental protection. This paper adds new empirical evidence to the body of knowledge by linking material efficiency to both accounting and market based measures of financial performance which has been missing in extant literature.

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