Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott

Posted: 12 Nov 1998

See all articles by Siew Hong Teoh

Siew Hong Teoh

University of California, Irvine - Accounting Area

Ivo Welch

University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)

C. Paul Wazzan

Berkeley Research Group,LLC

Abstract

This article studies the most important legislative and shareholder boycott to date, the boycott of South Africa's apartheid regime. We 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 shareholdings 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.

JEL Classification: G31, G32, G34

Suggested Citation

Teoh, Siew Hong and Welch, Ivo and Wazzan, Christopher Paul, Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott. Journal of Business, Vol. 72, No. 1, January 1999. Available at SSRN: https://ssrn.com/abstract=138589

Siew Hong Teoh

University of California, Irvine - Accounting Area ( email )

Irvine, CA 92697-3125
United States

Ivo Welch (Contact Author)

University of California, Los Angeles (UCLA) ( email )

110 Westwood Plaza
C519
Los Angeles, CA 90095-1481
United States
310-825-2508 (Phone)

HOME PAGE: http://www.ivo-welch.info

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christopher Paul Wazzan

Berkeley Research Group,LLC ( email )

2049 Century Park East, Suite 2525
Los Angeles, CA 90067
United States

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