The evolution and alignment of institutional shareholder engagement through the King and CRISA reports

2020 ◽  
Vol 11 (2) ◽  
pp. 147-153
Author(s):  
Richard Foster
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Institutional Investors ◽  
Shareholder Activism ◽  
Institutional Investor ◽  
Historical Narrative ◽  
Content Type ◽  
Shareholder Engagement ◽  
On The Road ◽  
High Level

Purpose The purpose of this study is to provide a high-level review of the evolution of shareholder activism and institutional investor engagement in the corporate governance ecosystem in South Africa. Furthermore, it specifically seeks to explain the incorporation of such aspects into the various key codes and reports on corporate governance in South Africa since 1994. Design/methodology/approach Historical narrative and analysis. Findings This study highlights how shareholder activism and institutional investor engagement in the corporate governance ecosystem have been considered and addressed in South Africa since the publication of the First King Report in 1994. The progress that has been made specifically with regard to the introduction of a code for institutional investors is highlighted. The study ultimately acknowledges that this evolution is a continuing journey on the road to stakeholder inclusivity and engagement, and then concludes that the specific role and impact of institutional investors, particularly given some of the recent corporate governance failures, will require further consideration going forward. This should ensure the continued alignment of all stakeholders and assist in making the necessary improvements to the overarching governance framework and attendant culture. Originality/value This study is a part of a special issue that looks at the contribution of the King reports to governance globally.

The evolution of the stakeholder-inclusive approach in the King Reports

2020 ◽  
Vol 11 (2) ◽  
pp. 139-146
Author(s):  
Annamarie van der Merwe
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Design Methodology ◽  
Human Intervention ◽  
Common Theme ◽  
Special Issue ◽  
Content Type ◽  
Corporate Governance Code ◽  
Inclusive Approach ◽  
High Level

Purpose The purpose of this paper is to provide the reader with a high-level overview of the key messages of each of the four King Reports on Corporate Governance for South Africa, published during the period from 1994 to 2017, with a particular focus on the stakeholder-inclusive approach. While confirming the constant themes and messages, it also highlights the unique features and attributes of each of these reports. Design/methodology/approach This paper is based on a review and comparison of the four King Reports of Corporate Governance for South Africa with a particular focus on the stakeholder-inclusive approach. Findings The key findings of this paper are: the concept of “stakeholder inclusivity” is a common theme across all four the King Reports forming part of the review while, at the same time, having a unique flavour in each of the reports and visibly developing over the years. The reliance on human intervention and ethical leaders to appropriately and effectively steer the stakeholder-inclusive approach is obvious. In the absence of this, no corporate governance code will provide adequate safeguards to stakeholders against corporate failures and disasters, whether in South Africa or anywhere else. Originality/value This paper is a part of a special issue which looks at the contribution of the King Reports to governance globally.

Changes in ownership forms and role of institutional investors in governing public companies in Malaysia

2015 ◽  
Vol 11 (4) ◽  
pp. 455-475 ◽  
Author(s):  
Hairul Azlan Annuar
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Institutional Investor ◽  
Governance System ◽  
Public Companies ◽  
Content Type ◽  
Investment Companies ◽  
Corporate Governance System ◽  
Different Types

Purpose – The purpose of this paper is to ascertain whether different types of institutional investor in Malaysia are involved in the corporate governance of their investee companies, and, if yes, to what extent is the level of the involvement. Design/methodology/approach – A qualitative approach, consisting of a series of interviews with 18 senior investment managers of different types of institutional investor, was chosen. Findings – The findings suggest that lessons learnt from the fallout of the Asian crisis has made Malaysian institutional investors not only to be more prudent in managing their total funds and in making equities investment decisions, but has resulted in a more active participation in their “core” investee companies apart from merely discharging their voting rights. Interview analysis revealed that government-linked investment companies are championing the cause and could possibly affect the overall level of institutional investors’ involvement, which bode well for the future of the corporate governance system of the country. Research limitations/implications – Generalisations may be an issue when interviews are used as the method of inquiry. Also, the sample is not random, as access to many managers depended on recommendations. In addition, respondents were consciously selected to obtain different types of institutional investors that included government and non-government linked. Originality/value – There is a lack of work on studying the involvement of institutional investors in developing countries, whereby previous work and literature review were predominantly based upon the experience of Western economies.

Successful private investor activism in an emerging market

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Suzette Viviers ◽  
Nadia Mans-Kemp
Keyword(s):  
Wage Gap ◽  
Emerging Market ◽  
Shareholder Activism ◽  
Institutional Investor ◽  
Time Data ◽  
Content Type ◽  
Responsible Investing ◽  
Shareholder Engagement ◽  
Executive Remuneration ◽  
Single Well

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.

Corporate governance practice in the context of the political situation in South Africa over the last 25 years

2020 ◽  
Vol 11 (2) ◽  
pp. 127-137
Author(s):  
Suresh Parbhoo Kana
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Institutional Culture ◽  
Historical Narrative ◽  
Business And Society ◽  
Content Type ◽  
Social Interests ◽  
Strategic Assets ◽  
Governance Practice ◽  
Corporate Governance Practice

Purpose This study aims to demonstrate, with reference to developments in the four King Reports on Corporate Governance for South Africa, that institutional culture should be governed with the same rigour applied to other strategic assets to align the pluralistic interests of government, business and society. Design/methodology/approach Historical narrative and analysis. Findings Institutional culture should be governed with the same rigour and veracity as more traditional assets to align organisational purpose with political and social interests. Originality/value This is part of a special issue that looks at the contribution of the King Reports to governance globally.

scholarly journals Difficulties in being responsible institutional investors: evidencefrom Malaysia

2019 ◽  
Vol 16 (4) ◽  
pp. 507-520
Author(s):  
Hairul Azlan Annuar
Keyword(s):  
Corporate Governance ◽  
Emerging Markets ◽  
Financial Performance ◽  
Institutional Investors ◽  
Design Methodology ◽  
Shareholder Activism ◽  
Listed Companies ◽  
Qualitative Approach ◽  
Content Type ◽  
Different Types

Purpose The purpose of this paper is to ascertain whether institutional investors in Malaysia faced limitations when they are involved in the corporate governance of their investee companies. Design/methodology/approach A qualitative approach, consisting of a series of interviews with senior investment managers of different type of institutional investors, was chosen. In total, 18 interviews were conducted over a period of two months, which is thought to sufficiently provide the answers to the research purpose. Findings The interviews revealed there are difficulties in monitoring all investee companies due to lack of time and resources. Traditional measures such as company financial performance and dividend policy, continued to be favored and rigorously monitored. The overdependence on hard criteria may be a result of a culture of overly rewarding beneficiaries and a lack of expertise in being involved in specialized company areas such as strategy. Strict regulations hamper effort to be more involved in governing investee companies. Research limitations/implications The research used interviews and generalization may become an issue. In addition, access to many managers depended on recommendations, and the respondents are selected to represent the different types of institutional investors. Originality/value Investigation into factors that may limit institutional investors’ involvement in corporate governance in Malaysian public listed companies, especially from a more qualitative viewpoint, is lacking. In addition, this paper advances the understanding of shareholder activism by adding to the literature by exploring the issue in a specific emerging markets context.

Determinants of voluntary formation of risk management committees

2014 ◽  
Vol 29 (7) ◽  
pp. 649-671 ◽  
Author(s):  
Nkoko Blessy Sekome ◽  
Tesfaye Taddesse Lemma
Keyword(s):  
South Africa ◽  
Risk Management ◽  
Corporate Governance ◽  
Management Practices ◽  
Emerging Economy ◽  
Board Structure ◽  
Content Type ◽  
Listed Firms ◽  
Practical Implications

Purpose – The aim of this paper is to examine the nexus between firm-specific attributes and a company’s decision to setup a separate risk management committee (RMC) as a sub-committee of the board within the context of an emerging economy, South Africa. Design/methodology/approach – The authors analyse data extracted from audited annual financial reports of 181 non-financial firms listed on the Johannesburg Securities Exchange (JSE) by using logistic regression technique. Findings – The results show a strong positive relationship between the existence of a separate RMC and board independence, board size, firm size and industry type. However, the authors fail to find support for the hypotheses that independent board chairman, auditor reputation, reporting risk and financial leverage have an influence on a firm’s decision to establish RMC as a separately standing committee in the board structure. The findings signify the role of costs associated with information asymmetry, agency, upkeep of a standalone RMC, damage to the reputation of directors and industry-specific idiosyncrasies on a firm’s decision to form a separate RMC. Research limitations/implications – As in most empirical studies, this study focuses on listed firms. Nonetheless, future studies that focus on non-listed firms could add additional insights to the literature. Investigating the role of firm-specific governance attributes other than those considered in the present study (e.g. gender of directors, ownership structure, etc.) could further enhance the understanding of antecedents of risk-management practices. Practical implications – The findings have practical implications for the investment community in assessing the quality of risk management practices of companies listed on the JSE. Furthermore, the results provide insights that are potentially useful to the King Committee and other corporate governance regulators in South Africa in their effort to improve corporate governance practices. Originality/value – The present study focuses on firms drawn from an emerging economy which has profound economic, institutional, political and cultural differences compared to advanced economies, which have received a disproportionately higher share of attention in prior studies. Thus, the study contributes additional insights to the literature on corporate risk management from the perspective of an emerging economy.

scholarly journals Corporate governance and corporate investment: an exploratory research in the Brazilian publicly traded companies listed in Bovespa

2011 ◽  
Vol 9 (1) ◽  
pp. 545-557
Author(s):  
Nádia Sousa ◽  
Flávia Zóboli Dalmácio
Keyword(s):  
Corporate Governance ◽  
Institutional Investors ◽  
Market Value ◽  
Institutional Investor ◽  
Capital Cost ◽  
Exploratory Research ◽  
Statistical Relation ◽  
Publicly Traded ◽  
Publicly Traded Companies ◽  
Governance Practices

This paper aims to study the influence of Corporate Governance practices in the institutional decision to invest. It was developed a Governance Index (iGov), a descending rank was prepared and a test was applied to check if the companies in the first 25% of this rank have the highest number of institutional investors among their biggest investors than the companies of the last 25%. For the validation of IGov it was tested if the companies with the best marks present highest Returns, lowest Capital Cost, highest Market Value, and highest Competiveness within the sector, lowest Beta, highest EVA® and lowest Share concentration. It has been proved that the best Corporate Governance practices do not have any statistical relation with the presence of more Institutional Investor.

Is institutional investor a supervisor or cooperator?

2018 ◽  
Vol 9 (1) ◽  
pp. 2-18 ◽  
Author(s):  
Yuedong Li ◽  
Xianbing Liu ◽  
Qing Yan
Keyword(s):  
Institutional Investors ◽  
Institutional Investor ◽  
Test Methods ◽  
Future Research ◽  
Management Turnover ◽  
Content Type ◽  
Financial Restatement ◽  
Strategic Cooperation ◽  
Financial Restatements ◽  
The Relationship

Purpose The purpose of this paper is to discuss whether top management will assume their liabilities especially when financial restatement occurs, and,based on the “effective supervision theory” and “strategic cooperation theory,” to examine whether an institutional investor is a supervisor or a cooperator considering the management turnover caused by financial restatement in the companies. Design/methodology/approach Using a sample of the A-share-listed companies from year 2010 to year 2014 and dividing financial restatement into fraudulent financial restatement and other financial restatement, the authors examine the relationship between financial restatement and abnormal management turnover, which usually is related to the management integrity or capacity. By using group test methods, the authors test the influence of the institutional investors’ shareholding on the relation between financial restatements and management turnover. Findings This paper finds that financial restatement can result in abnormal management turnover, especially the fraudulent financial restatement. The institutional investors usually are supervisors but when the shareholding of institutional investor is too high and the management turnover results from fraudulent financial restatement, the institutional investors may become cooperators with management in the companies. Besides, the institutional investors play the supervisory function more significantly in non-state-owned enterprises. Originality/value This paper expands literature of the institutional investors in the corporate governance area and provides a basis for future research in the area of the institutional investors’ governance effect. It divides financial restatements into fraudulent financial restatement and other financial restatement and examines the relationship between financial restatement and abnormal management turnover so as to provide evidence about whether the management will assume their responsibilities when there is financial restatement in the company. It also tests whether the institutional investors will play supervisor’s or cooperator’s function in state-owned and non-state-owned enterprises.

The relationship between corporate governance and intellectual capital

2019 ◽  
Vol 61 (2) ◽  
pp. 384-401 ◽  
Author(s):  
Amina Buallay ◽  
Allam Hamdan
Keyword(s):  
Corporate Governance ◽  
Firm Size ◽  
Intellectual Capital ◽  
Content Type ◽  
Listed Firms ◽  
Pooled Data ◽  
Structural Capital ◽  
Capital Efficiency ◽  
High Level ◽  
The Relationship

Purpose The purpose of this study is to examine the moderating role of firm size on the relationship between corporate governance (CG) and intellectual capital (IC) efficiency. Design/methodology/approach The methodology was a pooled data for three years (2012-2014) for 171 listed firms, resulting in 489 observations. Findings The findings revealed that the inclusion of firm size as a moderating variable has influenced positively only the relationship between CG principles and capital employed efficiency (CEE). Further, the finding showed that the two IC components namely, human capital efficiency and structural capital efficiency, tend to be higher with firms that high level of CG adoption. However, CEE tends to be higher with firms that have lower level of CG adoption. Other finding shows that CG index was significant with the three IC components. Originality/value Such information will help the stakeholders, investors, decision-makers, regulators, policymakers and scholars to improve their knowledge about IC. Furthermore, it will be useful for firms to place their priorities regarding the internal system and financial plans for effective and efficient use of CG and IC.

Corporate governance: the inputs to outcomes evolution

2020 ◽  
Vol 11 (2) ◽  
pp. 161-166
Author(s):  
Linda de Beer
Keyword(s):  
Corporate Governance ◽  
Design Methodology ◽  
Good Governance ◽  
Historical Narrative ◽  
Effective Control ◽  
Ethical Culture ◽  
Special Issue ◽  
Fourth Edition ◽  
Content Type ◽  
Clear Shift

Purpose The purpose of this study is to demonstrate that there was a clear shift from the First King Report in 1994, which advocated an input approach to corporate governance, to the Fourth King Report in 2016 that proposed an outcomes-based approach to corporate governance. It will be demonstrated that there was a gradual shift from an “apply-or-explain” approach in the earlier editions of the King Reports, to an “apply-an-explain” approach in the fourth edition of the King Report. Design/methodology/approach Historical narrative and analysis. Findings The fourth King Report, published in 2016, encapsulates an evolution in corporate governance thinking where four good governance outcomes – ethical culture, good performance, effective control and legitimacy – are placed at the forefront of measuring governance, with governance principles and practices following from these outcomes. Originality/value This study is part of a special issue that looks at the contribution of the King Reports to governance globally.

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