Shareholder participation as a valuable mechanism of corporate governance performance: A study of practices in Zimbabwe

Abstract

The aim of this research was to evaluate shareholder participation as a valuable mechanism of corporate governance on Zimbabwean listed companies. This was necessitated by recent global financial crisis which has intensified the ongoing debate about the role that shareholders should play in corporate governance. To some, increasing shareholder power and facilitating shareholder intervention, when necessary, is part of the necessary reforms. To others, activism by shareholders who potentially have short-term interests is part of the problem, not a solution. There is a notion that governance of public corporations now continues to move in a more shareholder-centric direction. This is evidenced by the increasing corporate influence of shareholder participation and activism, and shareholder proposals and votes. To demonstrate indications of whether there is a relationship between shareholder participation and good corporate governance, to examine the importance of shareholder participation as a mechanism of corporate governance and to assess whether shareholder participation can solve the agency problem, Zimbabwe Stock Exchange listed companies were used. A sample of fifty ZSE listed companies were surveyed through questionnaires and interviews which were administered to mainly top and middle management and company directors who have the major influence in corporate governance matters. The overall survey results revealed that the weak corporate governance practices in listed companies can be attributed to a greater extend to poor shareholder activism and participation in company affairs. It was discovered that shareholder participation is a very essential component in ensuring good corporate governance.