Background: Legislation was implemented in South Africa in 2003 and revised in 2013 to promote Broad-Based Black Economic Empowerment (B-BBEE).Aim: To investigate the relationship between B-BBEE compliance and a range of financial health measures among publicly listed companies.Setting: Altogether 379 companies listed on the Johannesburg Stock Exchange over the period 2004-2015.Methods: Data on the sampled companies' B-BBEE scores (in total and per element) were sourced from Empowerdex, whereas financial data were downloaded from Bloomberg. Panel regressions were computed to investigate hypothesised relationships.Results: A significant increasing trend was noted in B-BBEE compliance over the research period. No significant relationships were found between the total B-BBEE score, individual B-BBEE elements and any of the considered accounting-based measures (annual percentage change in turnover, return on sales, return on assets and return on equity). A significant negative relationship was observed between the market-based price/earnings ratio and total B-BBEE score, while a significant positive relationship was noted with the cost of equity. The latter seems to indicate a negative perception among shareholders towards B-BBEE. Conclusion:Although B-BBEE legislation has been partially successful, more can be done to achieve its goal of empowering black employees and small business owners. Management teams should be more diverse and greater emphasis should be placed on socio-economic development and skills development. Companies should caution against overemphasising the importance of black ownership, as shareholders seem to view this B-BBEE element in a somewhat negative light.

Purpose: Broad-Based Black Economic Empowerment (B-BBEE) legislation was introduced to promote the economic participation of black people in the South African economy. Some scholars have argued that, whilst it is important to empower black people, B-BBEE legislation is not necessarily the best mechanism available. Despite the criticism against B-BBEE, it remains the most prominent means of uplifting black people in the country. This study was conducted to reflect on whether selected companies listed on the Johannesburg Stock Exchange have improved their B-BBEE compliance and determine which elements included in the 2004 and 2007 Codes of Good Practice the companies have focussed on. The authors highlight progress made by listed companies in empowering black people and offer suggestions for improvement.Design/methodology/approach: A comprehensive data set, comprising 1767 observations for 379 listed companies over more than a decade (2004–2015), was analysed. Mixed-model analysis of variance and Fisher’s least significant difference tests were used to assess the significance of the observed trends. Significant increases in B-BBEE scores (in total and per element) were observed.Findings/results: The mean socio-economic development B-BBEE element score showed the largest change over the study period, whilst the employment equity element reflected the smallest change.Practical implications: The Department of Trade and Industry should reflect on the attainability of certain targets, especially employment equity and ownership. Government and listed companies are encouraged to critically evaluate the optimal manner to empower previously disadvantaged individuals.Originality/value: This study comprehensively explores the trends in B-BBEE compliance using statistical methods to provide suggestions to the Department of Trade and Industry and companies listed on the JSE.