Table $4\mathrm{.}1$: Excerpt of data on operating profit margin of JSE$-$listed financial firms and CEO compensation over the

$1995-2018$ period.

Data Analysis

Mr Mashudu analysed the data using IBM SPSS Statistics version $27$ and the output in Figure $4\mathrm{.}1$ to Figure $4\mathrm{.}6$ was

generated from the analysis. Figure $4\mathrm{.}2$:

Scatterblot of Oberating profit marcin vs CEO Combensation

Figure $4\mathrm{.}3$:

Correlations

${?}^{****}.$ Correlation is significant at the $0\mathrm{.}01$ level $(2-$tailed$).\backslash$table$[[$Figure $4\mathrm{.}4$:$,$Model Summar,,,$],[$Model$,$R$,$R Square,Adjusted R Square,Std$.$ Error of the Estimate$],[1,\mathrm{.}720^($a$),\mathrm{.}519,\mathrm{.}518,\mathrm{.}1428]]$

a$.$ Predictors: $($Constant$),$ Operating$\_$profit$\_$margin

b$.$ Dependent Variable: CEO$\_$Compensation

Figure $4\mathrm{.}5$:

ANOVA ${?}^a$

$\backslash$table$[[$Model$,,$Sum of Squares,df$,$Mean Square,F$,$Sig.$],[1,$Regression,$6\mathrm{.}9989,1,6\mathrm{.}9989,343\mathrm{.}1858,\mathrm{.}000^($b$)],[,$Residual,,,,,$],[,$Total,$6\mathrm{.}48527,318,\mathrm{.}0204,,]]$

a$.$ Dependent Variable: CEO$\_$Compensation

b$.$ Predictors: $($Constant$),$ Operating$\_$profit$\_$margin

Figure $4\mathrm{.}6$:

Coefficients ${?}^a$

$\backslash$table$[[$Model$,\backslash$table$[[$Unstandardized$],[$Coefficients$]],\backslash$table$[[$Standardized$],[$Coefficients$],[$Beta$]],$t$,$Sig.$],[$B$,$Std$.$ Error$],[1,($Constant$),\mathrm{.}3434,\mathrm{.}030,,11\mathrm{.}4364,\mathrm{.}000],[$Operating$\_$profit$\_$margin,$\mathrm{.}0445,\mathrm{.}002,\mathrm{.}720,18\mathrm{.}5253,\mathrm{.}000]]$

a$.$ Dependent Variable: CEO$\_$CompensationREQUIREMENTS FOR A NEW STUDY

As a business researcher with a keen research interest in entrepreneurial finance and sustainable investment, you have understood from the review of the extant literature that the environmental, social and governance $($ESG$)$ considerations that inform the investment decision$-$making of US$,$ UK and Europe$-$based venture capital and private equity firms are largely idiosyncratic, differing from firm to firm. Consequently, you are proposing an empirical investigation into how the ESG considerations of South African venture capital and private equity firms affect the performance of their investments. You have a privileged access to $30$ South African venture capital and private equity firms for purposes of data collection. With a quantitative approach in mind, you have formulated the following research questions:

$1.$ How idiosyncratic are the ESG considerations of South African venture capital and private equity firms?

$2.$ How do ESG considerations of South African venture capital and private equity firms affect the performance of the investments they select?

$3.$ What practical recommendations can be made to the management of South African venture capital and private equity firms on how best to leverage ESG considerations for improved investment performance?

QUESTION $4(20$ Marks$)$

On the basis of the information provided below, answer the following questions.

Mr P Mashudu is an organisational researcher with research interest in organisational behaviour and management remuneration. He has embarked on a study with the aim of examining the impact of the financial performance of JSE$-$listed financial companies on CEO compensation during the $19952018$ period. After reviewing the accounting and financial management literature, he noted that the sustainability of companies depends

on their being profitable. As such, profitability is the benchmark of financial performance of a company. Effective operational activities, investment activities and financing activities are essential for financial performance. Therefore, business entities seek to measure their profitability through their financial and nonfinancial performance, evaluating the increase or growth in sales, market share, cost reduction, customer satisfaction, or through indicators such as return on capital employed $($ROCE$),$ return on assets $($ROA$),$ return on sales $($ROS$),$ return on equity $($ROE$),$ gross profit margin, operating profit margin, net profit margin, and other financial indicators $($Azim et al$.,2017$ Naknok, $2022).$ Mr Mashudu resolved to use operating profit margin as a proxy for organisational financial performance and the annual total compensation of the CEO as a percentage of annual sales of firm $(\%)$ as the proxy of CEO compensation. To prevent possible distortion of the findings, Mr Mashudu decided to use data before the COVID$-19$ pandemic$$ thus, the data of

interest are records of CEO compensation and information extracted from the financial statements of JSE$-$listed financial companies for the $19952018$ period. Mr Mashudu obtained a total of $320$ sets of valid reference data. Table $4\mathrm{.}1$ is an excerpt of the research data.