This study investigates the determinants of shareholder activism (SA) in the Indian context. This investigation aims to identify factors that significantly contribute to the likelihood of SA in a developing country setting, such as India, to provide meaningful insights into the determinants and dimensions of SA.
This study uses content analysis and a binary panel logit model to investigate the relationship between various explanatory variables and the likelihood of SA. Content analysis was used to identify the determinants of SA and categorise them into various types of demands, based on existing literature. Furthermore, a binary panel logit model is used to assess the significance of the independent variables and their classification accuracy, using a sample of 46 listed Indian firms where SA occurred.
The findings suggest that the determinants of SA in India are multifaceted. SA has gained momentum in recent years, with governance-related demands being the primary issue. The panel logit model suggests that major governance-related, financial restructuring–related, related party transactions–related and remuneration-related factors significantly affected the likelihood of SA.
This study provides valuable insights into the determinants of SA, thereby contributing to the limited existing literature in this domain. These findings will also highlight the need to study SA in the Indian context and can act as a foundation for further exploration.
This study’s findings will inform policymakers on the governance reforms needed to integrate SA as a tool for safeguarding minority shareholders’ interests.
This study’s originality lies in the fact that very little literature is available in the Indian context, and SA has evolved significantly over the past years. This study will help highlight the importance and utility of SA in the Indian context.
