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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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  • Teoh, Siew Hong
  • Welch, Ivo
  • Wazzan, C Paul

Abstract

The authors study the most important legislative and shareholder boycott to date, the boycott of South Africa's apartheid regime, and find that corporate involvement with South Africa was so small that the announcement of legislative/shareholder pressure or voluntary corporate 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 share-holdings increased when corporations divested. In sum, despite the publicity of the boycott and the multitude of divesting companies, political pressure had little visible effect on the financial markets. Copyright 1999 by University of Chicago Press.

Suggested Citation

  • Teoh, Siew Hong & Welch, Ivo & Wazzan, C Paul, 1999. "The Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott," The Journal of Business, University of Chicago Press, vol. 72(1), pages 35-89, January.
  • Handle: RePEc:ucp:jnlbus:v:72:y:1999:i:1:p:35-89
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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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