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The Effect Of Socially Activist Investment Policies On The Financial Markets: Evidence From The South African Boycott

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  • Siew Hong Teoh

    () (Fisher College of Business)

  • Christopher Paul Wazzan

    () (Anderson School of Management)

  • Ivo Welch

    () (International Center for Finance)

Abstract

Governments and vocal institutional shareholders have been exerting pressure on companies they deem to have objectionable operations (such as tobacco or chemical producers). This paper studies the effect of the most important legislative and shareholder boycott to date, the boycott of the South Africa's apartheid regime. We find that the announcement of legislative/shareholder pressure of voluntary divestment from South Africa had little discernible effect either on the valuation of banks and corporations with South African operations or on the South African financial markets. There is weak evidence that institutional shareholdings increased when corporations divested. In sum, despite the public significance of the boycott and the multitude of divesting companies, financial markets seem to have perceived the boycott to be merely a "sideshow."

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Paper provided by Yale School of Management in its series Yale School of Management Working Papers with number ysm70.

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Date of creation: 11 Nov 1996
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Handle: RePEc:ysm:somwrk:ysm70

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Cited by:
  1. Peter Rodriguez & Donald S Siegel & Amy Hillman & Lorraine Eden, 2006. "Three lenses on the multinational enterprise: politics, corruption, and corporate social responsibility," Journal of International Business Studies, Palgrave Macmillan, vol. 37(6), pages 733-746, November.
  2. Neil Eccles, 2010. "UN Principles for Responsible Investment Signatories and the Anti-Apartheid SRI Movement: A Thought Experiment," Journal of Business Ethics, Springer, vol. 95(3), pages 415-424, September.
  3. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: Strategic Implications," Journal of Management Studies, Wiley Blackwell, vol. 43(1), pages 1-18, 01.
  4. Maobin Wang & Chun Qiu & Dongmin Kong, 2011. "Corporate Social Responsibility, Investor Behaviors, and Stock Market Returns: Evidence from a Natural Experiment in China," Journal of Business Ethics, Springer, vol. 101(1), pages 127-141, June.
  5. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: International Perspectives," Rensselaer Working Papers in Economics 0604, Rensselaer Polytechnic Institute, Department of Economics.
  6. Sébastien Mena & Marieke Leede & Dorothée Baumann & Nicky Black & Sara Lindeman & Lindsay McShane, 2010. "Advancing the Business and Human Rights Agenda: Dialogue, Empowerment, and Constructive Engagement," Journal of Business Ethics, Springer, vol. 93(1), pages 161-188, April.
  7. Alicia H. Munnell, 2007. "Should Public Plans Engage in Social Investing?," Issues in Brief ib2007-7-12, Center for Retirement Research, revised Aug 2007.
  8. Falck, Oliver & Heblich, Stephan, 2006. "Corporate Social Responsibility: Einbettung des Unternehmens in das Wirtschaftssystem," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-45-06, University of Passau, Faculty of Business and Economics.
  9. Laura Poddi & Sergio Vergalli, 2008. "Does Corporate Social Responsibility Affect Firms' Performance?," Working Papers 0809, University of Brescia, Department of Economics.
  10. Frédérique Dejean, 2002. "L'Investissement Socialement Responsable : Une Revue De La Litterature," Post-Print halshs-00584461, HAL.
  11. Martha A. Starr, 2006. "Macroeconomic dimensions of social economics: Saving, the stock market, and pension systems," Working Papers 2006-09, American University, Department of Economics.
  12. Supriti Mishra & Damodar Suar, 2010. "Does Corporate Social Responsibility Influence Firm Performance of Indian Companies?," Journal of Business Ethics, Springer, vol. 95(4), pages 571-601, September.
  13. Choi, Jong-Seo & Kwak, Young-Min & Choe, Chongwoo, 2010. "Corporate Social Responsibility and Corporate Financial Performance: Evidence from Korea," MPRA Paper 22159, University Library of Munich, Germany.
  14. Baron, David P., 2002. "Private Politics and Private Policy: A Theory of Boycotts," Research Papers 1766, Stanford University, Graduate School of Business.
  15. Gupta, Sonam & Innes, Robert, 2008. "Determinants and Impact of Private Politics: An Empirical Analysis," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6238, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  16. Larry Chavis & Phillip Leslie, 2009. "Consumer boycotts: The impact of the Iraq war on French wine sales in the U.S," Quantitative Marketing and Economics, Springer, vol. 7(1), pages 37-67, March.
  17. Larry Chavis & Phillip Leslie, 2006. "Consumer Boycotts: The Impact of the Iraq War on French Wine Sales in the U.S," NBER Working Papers 11981, National Bureau of Economic Research, Inc.
  18. Chung-Hua Shen & Yuan Chang, 2009. "Ambition Versus Conscience, Does Corporate Social Responsibility Pay off? The Application of Matching Methods," Journal of Business Ethics, Springer, vol. 88(1), pages 133-153, April.
  19. Sergio Vergalli & Laura Poddi, 2009. "Does Corporate Social Responsibility Affect the Performance of Firms?," Working Papers 2009.52, Fondazione Eni Enrico Mattei.

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