Shareholder Activism: Telecommunication Industry In Turkey

Authors : Emre ERGİN, İlkay Ejder ERTURAN

Pages : 101-116

Doi:10.14780/muiibd.329905

View : 98 | Download : 39

Publication Date : 2017-07-19

Article Type : Research Paper

Abstract :Shareholders began to play an active role in diminishing the growing agency costs due to recent financial crisis, poor corporate governance and excessive executive compensations. They act as individual and corporate forms in order to protect their investment and increase firm value. Nowadays, social activities of the past have changed to replace the general manager, overcome the duality problem, elect a board member other than the management candidates, vote for acquisition or sale decisions, and dividend distribution. The ownership structure in Turkey is generally composed of families or individuals who do not act aggressively as the hedge funds in USA. The sales of Turkish companies’ shares to foreign shareholders, introduction of international investment funds in the local market, and electronic general meeting system introduced a few years ago contribute to shareholder activism in Turkey. Shareholder struggles are witnessed only in the Turkish stock market which is quoted in the NYSE. In this study, the two publicly traded companies in the telecommunication sector, namely Türk Telekom and Turkcell, are examined in terms of their financial situation, the acceptance rate of the propositions of the management in the general meetings, and the behavior of their share prices. Shareholder activism is not seen in the Telekom, whereas there have been trials and regulation changes for Turkcell. In terms of accounting-based data, Türk Telekom has a lower operational profitability and current ratio as compared to Turkcell. It is concluded that the level of shareholder activism occurred in the general meetings does not affect the share prices. Both companies’ shares moved in high correlation during the last three years. The share prices did not show abnormal patterns during the days following the general meetings. The reasons might be the growth of the telecommunication industry being above the national growth rate and the positive evaluations of the shareholders’ decisions by the investors for the future of the firm.
Keywords : Shareholder Activism, Agency Theory, Telecommunication, Turkey

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