Successful private investor activism in an emerging market
ISSN: 1472-0701
Article publication date: 5 November 2020
Issue publication date: 23 January 2021
Abstract
Purpose
Institutional investors in emerging markets are increasingly under pressure to integrate environmental, social and corporate governance considerations into their investment analyses and ownership practices. Old Mutual Investment Group (OMIG) is a South African-based institutional investor that has long been regarded as a pioneer in responsible investing. The purpose of this study was to examine the nature and effectiveness of OMIG's private shareholder activism endeavours over the period 1 January 2014 to 30 June 2018.
Design/methodology/approach
A unique database was constructed using proprietary, point-in-time data for 69 listed companies covering 283 private engagements. Binary logistic regressions were conducted to test the hypothesised relationships.
Findings
The majority of the private engagements centred on executive remuneration. This finding was not unexpected given the large and growing wage gap in South Africa. Close to two-thirds of OMIG’s private deliberations were successful. Engagement success was positively associated with a targeted company’s capacity to change and desire to protect its reputation.
Research limitations/implications
This study only investigated the private shareholder engagement actions of a single, well-resourced institutional investor.
Practical implications
The findings serve as an encouragement to other investors who are contemplating a more active approach to change unethical and unsustainable corporate policies and practices.
Originality/value
This unique analysis sheds light on the determinants and success of private shareholder activism in an emerging market.
Keywords
Acknowledgements
The authors wish to extent a special word of thanks to OMIG for providing them with their proprietary engagement data. The study would not have been possible without the assistance of Messrs Robert Lewenson and Jon Duncan. Our gratitude is also extended to Ms Lizelle Coetzee for collecting and organising some of the data, Prof Martin Kidd and Dr Stefanie Kühn for their assistance with the statistical analysis and Prof Eon Smit for acting as a critical reader. The two anonymous reviewers are also thanked for their valuable inputs.
Citation
Viviers, S. and Mans-Kemp, N. (2021), "Successful private investor activism in an emerging market", Corporate Governance, Vol. 21 No. 1, pp. 92-110. https://doi.org/10.1108/CG-11-2019-0366
Publisher
:Emerald Publishing Limited
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