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

Abstract

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.

Shareholder activism in Indonesia: revisiting shareholder rights implementation and future challenges

“…The passiveness of Indonesian shareholders, albeit similar to shareholders in other Asian countries as presented in Beebeejaun and Koobloll (2018), can serve as the biggest challenge in encouraging the development of shareholder activism in Indonesia.…”

“…Moreover, the research of Azizan and Ameer (2012) shows that one of the functions of shareholder activism is to provide a control mechanism for managerial moral hazard, whereas the monitoring and disciplinary roles resulted from shareholder activism to deal with incompetent or problematic directors are explained in Mukwiri and Siems (2014). On the other hand, shareholder activism can also act as an agent of change in the company’s direction and activities without any conflict with the management (Gillan and Starks, 2000; Beebeejaun and Koobloll, 2018).…”

“…Taking into account the aforementioned various factors in different jurisdictions, comparative and sometimes specialized research studies on shareholder activism that are focused on certain jurisdictions have been carried out in, for example, Seki (2005), Anderson and Ramsay (2005), Gillan and Starks (2007), Beebeejaun and Koobloll (2018), Jefferies (2019) and Engert (2019). As for the case of Indonesia, research on shareholder activism is still scarce despite the rising urgency of company supervision and monitoring to prevent corporate scandal such as the abuse of position for personal benefit conducted by the now-dismissed Chief Executive Officer of Garuda Indonesia, Indonesia’s national airline in 2018.…”

Minority shareholder activism in light of the Indian companies act, 2013

“…The concept of shareholder activism as observed in the literature is more researched and documented in context of countries such as USA (Gillan and Starks, 2009), UK (Filatotchev and Dotsenko, 2015) and European countries. Countries such as Malaysia (Satkunasingam and Shanmugam, 2006; Othman and Borges, 2016), Indonesia (Beebeejaun and Koobloll, 2018) and Mauritius (Prisandani, 2021) are scarce on the topic. One reason could be attributed to scattered ownership or fewer laws facilitating the involvement of investors in company’s working.…”

Exploring the role of institutional investors in voting, monitoring and dialogue engagement in mitigating agency conflict in Malaysia’s public listed companies

“…It adheres to the principles of agency cost theory. The duties of institutional investors become critical when it comes to maintaining strong corporate governance and ensuring that agency conflicts can be controlled (Beebeejaun & Koobloll, 2018;Chen, Liu, & Yan, 2022;Jensen & Meckling, 1979;Lewellen & Lewellen, 2022). Institutional investors have a substantial presence and rising impact in the world's financial markets.…”