Original Research

The effect of public investor activism on trust: A case study in the asset management sector

Suzette Viviers, Edwin Theron
Journal of Economic and Financial Sciences | Vol 12, No 1 | a199 | DOI: https://doi.org/10.4102/jef.v12i1.199 | © 2019 Suzette Viviers, Edwin Theron | This work is licensed under CC Attribution 4.0
Submitted: 20 March 2018 | Published: 11 February 2019

About the author(s)

Suzette Viviers, Department of Business Management, Stellenbosch University, South Africa
Edwin Theron, Department of Business Management, Stellenbosch University, South Africa

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Orientation: Compromised global trust levels appears to be one of the lasting legacies of the 2007 financial crisis, also in the financial services industry. In order to rebuilt trust, it is not only important to identify the drivers of trust, but also to assess the contexts within which trust is cultivated.

Research purpose: The researchers investigated the impact that this announcement and a subsequent apology by Futuregrowth’s chief investment officer (CIO) had on trust in the asset management sector.

Motivation for the study: Trust could be compromised when investors publicly engage with investee companies on contentious issues. As most investor activism in South Africa takes place in private, a unique research opportunity presented itself when Futuregrowth Asset Management publicly announced that they would suspend their funding to six state-owned enterprises (SOEs). Futuregrowth is the biggest private fixed-income asset manager in Africa and is renowned as a responsible investor.

Research approach/design and method: Content analysis was performed on 31 articles published in financial newspapers and magazines. In addition, semi-structured personal interviews were conducted with the CIO of Futuregrowth, another member of his team and six prominent local asset managers.

Main findings: The findings suggest that asset managers who wish to engage with investee companies in South Africa, especially SOEs, should preferably do so in private as a first recourse. When they do decide to speak out in public, they should focus on maintaining both calculative and affective trust. Failure to recognise the importance of affective trust, especially during periods of socio-political and economic uncertainty, could jeopardise trust in the asset management sector.

Practical/managerial implications: The evidence suggests that affective trust is increasingly important in the chosen sector. Asset managers should no longer only focus exclusively on credibility, reliability and competence but should also give due consideration to the affective trust elements of integrity and fairness.

Contribution/value-add: The findings are particularly pertinent in countries with small stock exchanges and high degrees of director interlocking. The research methodology adopted in this study represents a novel contribution to research in the asset management field.


corporate governance; public investor activism; trust; asset management sector


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