Shareholder Activism in Malaysia: Is it Effective?

Othman, Sarina; Borges, William G.

doi:10.1016/j.sbspro.2015.01.396

Cited by 27 publications

(8 citation statements)

References 56 publications

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“…This study, which, to the best of our knowledge, is the first of its kind in the Middle East and North Africa, describes SA as a moderator of the relationship between CG and FP. Nevertheless, research on SA in the emerging economies is scanty (Othman & Borges, 2015).…”

Section: Discussionmentioning

confidence: 99%

Shareholders’ activism as a moderator of the relationship between corporate governance and return on investment

Albakoush

Ishak

2019

Investment Management and Financial Innovations

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The purpose of shareholders’ involvement in the process of governance is to add corporate value and achieve better governance and firm performance (FP). However, corporate governance (CG) practices can vary from country to country and change over time. This study examines the moderating influence of shareholders’ activism (SA) on the CG effectiveness – FP relationship in non-financial companies listed in the Libyan Stock Market between 2007 and 2016. CG effectiveness was the independent variable and consisted of five dimensions: board of directors, monitoring committee, audit committee, nomination and compensation committee, and ownership. Leverage, firm age and firm size were used as control variables. Return on investment was used to assess the corporate performance. SA was tested as a moderating variable using the interactive regression models. The study found out that the CG effectiveness is positively and significantly related to return on investment (beta = 0.608, p &lt; 0.01). This relationship was strengthened by SA (R2 = 0.053, P &lt; 0.05). Overall, the study shows that SA boosts the relationship between CG and FP in the Libyan Stock Market.

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Section: Discussionmentioning

confidence: 99%

Shareholders’ activism as a moderator of the relationship between corporate governance and return on investment

Albakoush

Ishak

2019

Investment Management and Financial Innovations

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“…However real interest and serious attention was only given to Shareholder activism only after the 1997 financial crisis. Since then, shareholder activism is viewed as a good corporate governance practice (Othman and Borges, 2014).…”

Section: Malaysiamentioning

confidence: 99%

“…Malaysia has also depicted a collaborative initiative from the institutions to empower on the shareholder protection framework. Companies Commission of Malaysia, the Malaysian Institute of Corporate Governance and many other institutions have acted hand in hand to create several important pillars to the Malaysian corporate sector such as the Corporate Governance Blueprint 2011, Malaysian Code for Institutional Investors ( 2014) and several such codes to regulate the investors relationship with the company (Othman and Borges, 2014).…”

Section: Malaysiamentioning

confidence: 99%

“…In 2002, "YAB Dato" Seri Abdullah Ahmad Badawi', former Deputy Prime Minister of Malaysia, addressed the Securities Commission's that; "shareholders should not sit in silence and watch irresponsible owners or managers drive the companies." The promotion and support for shareholder activism was at the root of the nation itself (Othman and Borges, 2014).…”

Section: Malaysiamentioning

confidence: 99%

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An assessment whether shareholder activism can be a corporate governance driver in the case of Mauritius

Beebeejaun

Koobloll

2018

IJLMA

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Purpose “Shareholder activism works when shareholders understand something about the characteristics of the business that the board doesn’t”. As complex the term shareholder activism may seem, it demonstrates a very simple phenomenon of how shareholder take control of a situation to turn it in their favor. The whole world has taken an activism “twist” where every person has a word to say. The same characteristic of the society is showcased in this paper where engagement of shareholder is questioned whether it helps to promote effective corporate governance. Given the fact that Mauritius has a rather low shareholder activism framework, this research aims to depict the international picture of the issue at different levels to reach a consensus with the local market. It was a major challenge as very little research has been conducted to accurately contrast shareholder activism with corporate governance. However, the international standards aim at giving a clear picture of how the shareholder activism actually functions. Design/methodology/approach The research has adopted a black letter approach by analyzing relevant laws and legislations governing corporate governance matters in Mauritius and the USA, Malaysia, France and South Africa. Thereafter, a comparative analysis was made between Mauritius laws and the aforementioned countries. Recommendations were then put forward on the subject matter which is shareholder activism. Findings Research has shown development in corporate governance alongside the increase in shareholder activism. However, these research studies fail to prove that the development is because of shareholder activism itself. In fact, it could be because of increase in corporate intellects, removal of trade barriers, sustainable corporate practices and many such changes that have affected the corporate market somehow. Hence, it is difficult to conclude, with certainty, that the driver of good corporate governance is, in particular, the phenomenon of shareholder activism. Nevertheless, many result of shareholder activism has demonstrated a rather positive impact on the ongoing of the corporate dealings and on a personal note, it can be said that shareholder activism is a domain where much research and development should be effected as it represents a promising improvement in the way corporations are governed. Originality/value The concept of shareholder activism is quite new to the Mauritius legislation. There has not been research done on whether shareholder activism, particularly, is the reason for corporate success or failure. In this light, this paper aims to analyze shareholder activism practices in other countries and puts forward recommendation in the Mauritius context which may be of use to stakeholders concerned.

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“…Similarly, institutional shareholders, account for more than 25% of the share, and are dominant players in the Malaysian share market (Othman & Borges, 2015). Domestic pension funds have also emerged as main investors in Chilean public limited companies (Iglesias-Palau, 2000).…”

Section: Institutional Ownershipmentioning

confidence: 99%

Inward internationalisation and cross-border acquisitions by EMNEs: The moderating role of ownership heterogeneity

Chowdhury¹

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<p>Unlike Advanced Economy Multinational Enterprises (AMNEs), Emerging Economy Multinational Enterprises’ (EMNEs) dominant participation in international trade and investment is a recent phenomenon. Still, EMNEs are found to adopt bold strategies in the early stages of their internationalization and show path departure in the selection of their entry mode, such as cross border acquisition (CBA). CBA is not only a widely adopted EMNE internationalisation strategy but also distinguished EMNA internationalisation behaviour from that of AMNEs. CBA, entailing a high level of risk, requires considerable experiential knowledge that EMNEs lack. This knowledge deficit increases the perceived cost and risk associated with internationalisation and decreases the likelihood of engaging in foreign investment. There is a gap in the knowledge around how EMNEs compensate for their lack of experiential knowledge and how this experiential knowledge influences EMNEs’ adoption of CBA. Drawing from organisational learning as a theoretical lens, this study proposes that learning from inward internationalisation facilitates EMNEs’ CBA decisions. From an organisational perspective, experiential knowledge, especially externally sourced, is valuable when the acquired knowledge fits the recipient organisations’ existing dominant logic and values. Therefore ownership structure, such as family, institutional or corporate ownership, acts as a boundary condition and may influence the impact of inward internationalisation on CBA decisions. This idea is grounded in agency theory. This study argues that EMNEs compensate for their lack of internationalisation experiential knowledge through inward internationalisation (externally sourced experiential knowledge) which serves as a resource based antecedent leading EMNEs to make risky CBA decisions. Further, from an agency theory perspective, the study proposes that inward internationalisation – CBA relationships are likely to vary for different types of ownership categories. The study uses a quantitative approach to test the hypotheses in an Indian context. India, being a large emerging economy, provides an appropriate backdrop to test the study’s conceptual model. For this study, a sample of 369 CBAs conducted by 205 public listed companies from 2009 to 2017 was collected from the SDC platinum database. The sample generated a panel of 1845 firm-year observations. Through a negative binomial regression analysis, it is found that inward internationalisation has a positive impact on the likelihood of Indian MNEs’ CBA decision. Regarding the moderating effect of ownership, it is found that family ownership reduces the impact of inward internationalisation, whereas foreign institutional ownership increases the impact of inward internationalisation. No moderating effects are found for domestic institutional ownership, nor are they found for domestic or foreign corporate ownerships. This research contributes to the understanding of the EMNEs’ risky internationalisation behaviour through CBA. The present study adds to this stream of research by focusing on inward internationalisation and ownership structure influencing risky CBA decisions. In doing so, it contributes to organisational learning literature by suggesting that the impact of experiential knowledge may not necessarily be the same across the firms. This heterogeneity is attributable to EMNEs (knowledge acquiring organisation) who show varying motives, objectives and governance structure depending on their ownership structure. By examining the boundary condition of ownership heterogeneity, this study also contributes to Principal–Principal (PP) agency theory that ownership concentration along with owner’s identity is not only confined to strategy formulation but also extends to entry mode (CBA) decisions. Goal incongruence due to PP conflict between owners also decides whether experiential knowledge acquired from inward internationalisation fits with the firms or not in the resulting CBA decision. Finally, this study provides deep insights on different owners’ attitudes and their supporting or confining roles in moderating the impact of inward internationalisation on Indian EMNEs’ risk-taking behaviour during internationalisation.</p>

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Shareholder Activism in Malaysia: Is it Effective?

Cited by 27 publications

References 56 publications

Shareholders’ activism as a moderator of the relationship between corporate governance and return on investment

Shareholders’ activism as a moderator of the relationship between corporate governance and return on investment

An assessment whether shareholder activism can be a corporate governance driver in the case of Mauritius

Inward internationalisation and cross-border acquisitions by EMNEs: The moderating role of ownership heterogeneity

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