South Africa is at present experiencing the highest incidence of publication of the value added
statement reported anywhere in the world to date. In addition research investigating the
predictive ability of value added information has been conducted in the USA since 1990, even
though the value added statement has not been published there. The research reported in
this paper sets out to establish whether the value added statement is a disclosure worth
considering by companies around the world, by investigating the South African experience
with the value added statement.
The social accounting theories of organisational legitimacy and political costs were found to
be best suited to explain why the value added statement is published. Surveys among the
companies publishing the value added statement indicated that management had the
employees in mind when they published this information. However, a survey among users
has indicated that very little use has been made of the value added statement. The main
reason for this seems to be that the unregulated nature of the value added statement allows
for inconsistencies in disclosures, which eventually caused users to suspect bias in the
reports. The USA evidence that the information has additional predictive power is not
confirmed by a South African study, and is complicated by the limited additional information
contained in the value added statement.
The South African experience with the value added statement does not make a convincing
case for publication. Rather, it highlights the need for unbiased and verified social disclosures
that will be useful to all the stakeholders of the company. In addition, it has implications for
other voluntary social and environmental disclosures.