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


  • Siew Hong Teoh

    () (Fisher College of Business)

  • Christopher Paul Wazzan

    () (Anderson School of Management)

  • Ivo Welch

    () (International Center for Finance)


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."

Suggested Citation

  • Siew Hong Teoh & Christopher Paul Wazzan & Ivo Welch, 1996. "The Effect Of Socially Activist Investment Policies On The Financial Markets: Evidence From The South African Boycott," Yale School of Management Working Papers ysm70, Yale School of Management.
  • Handle: RePEc:ysm:somwrk:ysm70

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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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