{"title":"The unfolding of shareholder activism in India: an exploratory study","authors":"Ajaz Ul Islam","doi":"10.1108/ijlma-07-2023-0167","DOIUrl":null,"url":null,"abstract":"Purpose The purpose of this study is to provide a holistic view of the emergence of shareholder activism (SA) in India. However, specifically, this study aims at fulfilling the research gap by discussing the policy and legal advancement in the area of SA and investigating the chronological evolution of SA, manifestations of SA, motives of SA, outcome of SAs and impact of SA on the financial performance of the firm. Design/methodology/approach This study used a mixed methodology (both qualitative and quantitative) to draw inferences, including content analysis, descriptive statistics, independent sample t -test and paired sample t -test. The data has been collected from the annual reports of the sample companies and the Prowess database. Return on assets and return on equity have been used as measures of financial performance while investigating the difference in financial performance between firms subjected to SA and firms not subjected to SA. Findings The findings of this study suggest that there has been significant growth in the occurrence of SA incidents in India in the past decade, with shareholders prominently manifesting by opposing the proposals at annual general meetings/extraordinary general meetings, mostly involving governance-related demands. The findings from the independent sample t -tests revealed that there has been a significant difference in the financial performance of the sample subjected to SA and firms not subjected to SA. Furthermore, the results of the paired sample t -test provide strong evidence of significant improvement in the financial performance of firms’ post-SA. Practical implications The findings of this study have implications for various stakeholders. The findings of this study suggest that SA has been relatively more successful in the Indian context and may encourage minority shareholders to follow active participation through shareholder proposals and votes rather than a passive strategy to trade and exit. For firms, it can provide valuable inferences about the emergence of SA and how it has a positive impact on the financial performance of the firm, which can lead to a change in the perception of investors and promoters who perceive SA as a threat (Gillan and Starks 2000; Hartzell and Starks, 2003). For policymakers, it can act as a tool to investigate whether the regulatory changes have been able to bring the intended transparency, accountability and enhanced shareholder participation. This will encourage policymakers to be more agile, as their efforts are bearing fruit. This will also act as a guide to formulating future policies and regulations. Originality/value This study is an effort to provide a holistic view of SA scenarios in a developing economy setting like India, where SA is a very recent phenomenon. Although there are studies in the area of SA, there is a dearth of studies that have investigated the various dimensions of SA in the Indian context in a very systematic and extensive manner, investigating all the different dimensions of SA. Furthermore, this study also intends to investigate the impact of SA, which is normally perceived as a threat to financial performance and provide valuable contrasting evidence.","PeriodicalId":46125,"journal":{"name":"International Journal of Law and Management","volume":null,"pages":null},"PeriodicalIF":1.3000,"publicationDate":"2023-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Law and Management","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1108/ijlma-07-2023-0167","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"LAW","Score":null,"Total":0}
引用次数: 0
Abstract
Purpose The purpose of this study is to provide a holistic view of the emergence of shareholder activism (SA) in India. However, specifically, this study aims at fulfilling the research gap by discussing the policy and legal advancement in the area of SA and investigating the chronological evolution of SA, manifestations of SA, motives of SA, outcome of SAs and impact of SA on the financial performance of the firm. Design/methodology/approach This study used a mixed methodology (both qualitative and quantitative) to draw inferences, including content analysis, descriptive statistics, independent sample t -test and paired sample t -test. The data has been collected from the annual reports of the sample companies and the Prowess database. Return on assets and return on equity have been used as measures of financial performance while investigating the difference in financial performance between firms subjected to SA and firms not subjected to SA. Findings The findings of this study suggest that there has been significant growth in the occurrence of SA incidents in India in the past decade, with shareholders prominently manifesting by opposing the proposals at annual general meetings/extraordinary general meetings, mostly involving governance-related demands. The findings from the independent sample t -tests revealed that there has been a significant difference in the financial performance of the sample subjected to SA and firms not subjected to SA. Furthermore, the results of the paired sample t -test provide strong evidence of significant improvement in the financial performance of firms’ post-SA. Practical implications The findings of this study have implications for various stakeholders. The findings of this study suggest that SA has been relatively more successful in the Indian context and may encourage minority shareholders to follow active participation through shareholder proposals and votes rather than a passive strategy to trade and exit. For firms, it can provide valuable inferences about the emergence of SA and how it has a positive impact on the financial performance of the firm, which can lead to a change in the perception of investors and promoters who perceive SA as a threat (Gillan and Starks 2000; Hartzell and Starks, 2003). For policymakers, it can act as a tool to investigate whether the regulatory changes have been able to bring the intended transparency, accountability and enhanced shareholder participation. This will encourage policymakers to be more agile, as their efforts are bearing fruit. This will also act as a guide to formulating future policies and regulations. Originality/value This study is an effort to provide a holistic view of SA scenarios in a developing economy setting like India, where SA is a very recent phenomenon. Although there are studies in the area of SA, there is a dearth of studies that have investigated the various dimensions of SA in the Indian context in a very systematic and extensive manner, investigating all the different dimensions of SA. Furthermore, this study also intends to investigate the impact of SA, which is normally perceived as a threat to financial performance and provide valuable contrasting evidence.
本研究的目的是提供一个整体的观点,股东行动主义(SA)在印度的出现。然而,具体而言,本研究旨在通过讨论SA领域的政策和法律进展,调查SA的时间演变,SA的表现形式,SA的动机,SA的结果以及SA对公司财务绩效的影响来填补研究空白。设计/方法/方法本研究采用混合方法(定性和定量)进行推论,包括内容分析、描述性统计、独立样本t检验和配对样本t检验。这些数据是从样本公司的年度报告和实力数据库中收集的。资产收益率和股本收益率已被用作财务绩效的衡量标准,同时调查受SA影响的公司和未受SA影响的公司之间财务绩效的差异。本研究的结果表明,在过去十年中,印度的SA事件发生显著增加,股东在年度股东大会/特别股东大会上反对这些提案,主要涉及与治理相关的要求。独立样本t检验的结果显示,在接受SA的样本和未接受SA的公司的财务绩效方面存在显著差异。此外,配对样本t检验的结果提供了强有力的证据,证明公司的财务绩效显著改善后sa。本研究的结果对不同的利益相关者具有启示意义。本研究的结果表明,SA在印度背景下相对更成功,并可能鼓励中小股东通过股东提案和投票积极参与,而不是被动的交易和退出策略。对于公司来说,它可以提供关于SA的出现以及它如何对公司的财务绩效产生积极影响的有价值的推论,这可以导致将SA视为威胁的投资者和推动者的看法发生变化(Gillan和Starks 2000;Hartzell and Starks, 2003)。对于政策制定者来说,它可以作为一种工具,调查监管改革是否能够带来预期的透明度、问责制和股东参与程度的提高。这将鼓励政策制定者更加灵活,因为他们的努力正在取得成果。这也将作为制定未来政策和法规的指南。原创性/价值本研究旨在为印度等发展中经济体的SA情景提供一个整体视角,在印度,SA是一个非常新的现象。虽然在SA领域有研究,但在印度背景下以非常系统和广泛的方式调查SA的各个维度,调查SA的所有不同维度的研究还很缺乏。此外,本研究还打算调查SA的影响,这通常被认为是对财务绩效的威胁,并提供有价值的对比证据。
期刊介绍:
The International Journal of Law and Management is a leading journal addressing all aspects of regulation and law as they impact on organisational development, operations and leadership. Organisations and their leaders operate in an increasingly complex world of emerging regulation across national and international boundaries. The International Journal of Law and Management seeks to acknowledge the dynamics of that environment and provide a platform for articles and contributions to stimulate scholarly debate in the development of law and practice. The International Journal of Law and Management seeks to present the latest research on policy, practice and theoretical perspectives and their impact on the development and leadership of organisations. Contributions of a multi-disciplinary nature are welcome. Coverage includes, but is not limited to: -Employment and industrial law- Corporate governance and social responsibility- Intellectual property- Corporate law and finance- Insolvency- Commercial law and consumer protection- Environmental law- Taxation- Competition law- Regulatory theory