Villain or responsible investor? Investigating public perceptions of a vocal shareholder activist

Suzette Viviers* and Edwin Theron*
Stellenbosch University, South Africa*

Abstract: Maintaining long-term relationships has never been more important than in this era where more people are expressing their discontent via social media. The financial services industry is no exception. Within this context, 3 066 tweets that followed a public announcement by Futuregrowth Asset Management on 31 August 2016 were analysed. On this date, the lender publically announced that they would suspend further funding to six state-owned enterprises in South Africa. Futuregrowth’s chief investment officer justified the decision by citing serious governance concerns. Some tweets were extremely punitive. Futuregrowth was blamed for the weakening of the country’s currency and was accused of conspiring against the government. In contrast, other tweeters felt that the announcement was a wake-up call for the ruling party and that investors should actually be thanking Futuregrowth for being a responsible investor. Some tweeters called their decision a “game changer” and mentioned it in the same breath as investment boycotts and tax strikes. This study highlights the fragility of trust in the financial services industry in general and the asset management sector in particular. Given the risk of reputational damage, it is recommended that asset managers who want to fulfil their fiduciary duties do so in private.

Keywords: public investor activism, public perceptions, asset management sector