Shareholder activism, a fact or fiction: An analysis of Zimbabwean companies listed on the stock exchange

Abstract

Shareholder activism is an emerging phenomenon globally in the corporate governance discourse. The major purpose of this research was to explore the nature, form and extent of shareholder activism as a corporate governance mechanism in Zimbabwe public listed companies. The research was driven by the little body of knowledge regarding shareholder activism in the Zimbabwe corporate governance environment. Existing literature was reviewed on the subject of shareholder activism particularly its history, the regulatory framework that governs shareholder activism, motivations and drivers to shareholder activism, shareholder activism and its relationship and impact to corporate governance and the agency dilemma and the strategies that can be employed to enhance shareholder activism. The research used a qualitative methodology guided by the phenomenology research philosophy and the research design was a case study. The sample consisted of 21 participants comprising of directors, company secretaries, market analyst, majority and minority shareholders, the regulator of capital markets and the media. In the research primary and secondary sources of data were used. Primary data was collected through in-depth interviews using an interview guide and non-participant observations.

The research findings revealed that there are a number of factors that have hindered vibrant and effective shareholder activism in Zimbabwe listed companies and has resulted in shareholder apathy and lack of compliance to corporate governance standards. These factors include lack of an enabling legal framework that promotes shareholder activism, a board culture that is not receptive to activism especially during annual general meetings and underdeveloped capital and financial markets that do not generate much interest in shareholder activism by activist. Further the study revealed that lack of a Code specifically of Corporate Governance for companies listed on the Stock Exchange in Zimbabwe, lack of an effective shareholder association and weak internal corporate governance structures hindered effective shareholder participation. The study recommended that the regulatory framework should be reviewed so as to enhance shareholder participation, formulating a Code of Corporate Governance specifically for listed companies that promote shareholder participation, formulating a shareholder association that protects and advances the interest of minority shareholders, management to strengthen their internal governance structures such as annual general meetings so as to promote an environment of shareholder activism. The study objectives were met.