Towards Corporate accountability: Impediments to Institutional Shareholder
Activism in Nigeria
ABSTRACT
Purpose: The aim of this paper is to examine the impediments to institutional shareholder pursuit of accountability as activists in corporate Nigeria.
Design/ Methodology/ Approach: 19 semi-structured interviews were carried out with institutional investors in Nigeria. The Interviews aimed at investigating the corporate governance and non-corporate governance factors which impede institutional shareholder activism.
Findings: Our findings are three-fold. Firstly, certain corporate governance mechanisms (in particular, the Pension legal requirements and annual general meetings) can reduce the level of participation as well as constitute impediments to institutional shareholder activism. Secondly, dominant wealth maximization orientation enhances the prospects of substantial outlay in monitoring cost, and the threat to brand and patronage, which both act as disincentives to activism. This is consistent with the extant literature. Thirdly, majority (controlling) stakes when held by management and families can serve dual roles: as impediments and as substitutes to institutional shareholder engagement in activism.
Research limitations/ Implication: The paper focuses on a developing country.
Regulators need to consider how governance mechanism/structures affect corporate accountability and how the existing regulatory framework can be improved to ensure greater monitoring and accountability. Also, it explores the various managerial tactics employed in forestalling activism which are contrived within existing corporate governance regulations.
Originality/Value: The paper contributes to extant literature on corporate governance and accountability by unravelling how the unique setting of the environment contributes to the low level of corporate accountability pursued and required by institutional investors in the developing countries of sub-Saharan Africa.
Keywords: Corporate governance; accountability, institutional shareholder activism; agency theory; Nigeria
Paper type: Research Paper

INTRODUCTION
Corporate scandals and abuse of executive power continue to threaten the objective of institutional shareholders to maximize wealth, thus leading to calls from commentators for greater institutional shareholder involvement in monitoring and intervention as activists (Carleton et al, 1998; Franks and Mayer, 1994; Jacoby, 2007;
Karpoff, 2001; Prevost and Rao, 2000; Romano, 2001). The extant literature on institutional shareholder activism, mainly premised on Anglo-Saxon countries and
Europe have predominantly examined the existence and impact of institutional shareholder activism with limited emphasis on the impediments to effective activism especially in less developed countries (Del Guercio and Hawkins, 1998; Nesbitt,
1994; Opler and Sokobin, 1997; Smith, 1996; Romano, 2001; Useem, 1996).
In attempting to bridge this literature gap, this paper looks at the case of Nigeria, as a developing country which has experienced its fair share of corporate scandals and failures. Specifically, it intends to focuses on the subject of institutional shareholder monitoring and the pursuit of executive accountability through the lens of ‘activism’.
Yakasai (2001) posits that institutional shareholders play an important role in calling management to account in Nigeria. He notes that institutional shareholders are able to promote good corporate governance practices and better communication of financial information between management and shareholders in corporate Nigeria. However there is scanty literature in this regard. Also, shareholders associations in Nigeria as opposed to institutional shareholders are known to be the popular group of actors involved in governance activism aimed at corporate accountability (Amao and
Amaeshi 2008; Okike, 2007). Therefore, this paper investigates the impediments to institutional shareholder activism in the relatively unexplored context, Nigeria. while contributing to the discourse on agency theory.
This research is important to the development of the capital market, financial investment expansion and economic activities in Nigeria. Over the last decade, there has been increased institutional investment in Nigeria particularly from foreign investors (Stevenson, 2008). For instance, the total foreign portfolio investment in
2010 through the Nigerian Stock Exchange was $2.7 billion, representing 48 percent of the aggregate turnover value, and 47 percent increase over 2009 (Vanguard, 2011).
With increased interest in investment from institutional investors, the issue of shareholder monitoring and corporate accountability cannot be ignored. Whilst in recent times, scholars have attempted to understand and rationalize the experiences of institutional shareholders in Non-Anglo-Saxon countries (for example, see: Jacoby,
2007; McCahery et al, 2009; Xi, 2006), this paper contributes to this discourse through a case-study of Nigeria, as there is a noticeable absence of empirical literature on institutional activism in African countries.
Seminal works illuminating on the impediments to institutional shareholder activism posit that the following constitute obstacles to institutional shareholder activism: the legal rules on proportion of ownership; free-rider problem, monitoring cost; size of shareholdings; and the liquidity of the institutional investor (Pound, 1988; Brickley et al, 1988; Gillan and Starks, 2003; Romano, 2001). These obstacles are underpinned by institutional shareholders profit maximization objective, shareholding constraints and legality. According to Bainbridge (2005, p14) “most institutional investors compete to attract either the savings of small shareholders or the patronage of large

sponsors…….the winners generally are those with the best relative performance rates which makes institutions highly cost-conscious”. This setting depicts an interesting agency relation which would be useful to investigate in a country with differing institutional characteristics from Anglo-Saxon countries, a less developed market infrastructure, and deeply influenced by regulatory structures.
In the study of impediments to institutional shareholder activism in Nigeria, we pay particular attention to their wealth maximization objective and its influence on activism. It also digresses from previous perspectives by examining controlling shareholders that are not the institutional investors and how this affects the latter as monitors. It also drills into the Nigerian corporate governance system; specifically we consider the impact of regulation and regulatory mechanisms (in this case annual general meetings - AGMs) on institutional shareholder monitoring, which are important in promoting corporate accountability (Inyang, 2009; Okike, 2007;
Adegbite and Nakajima 2011). Whilst some authors have argued that institutional shareholders (especially in developed countries) do not engage with AGMs as this is substituted with other governance mechanism such as private shareholder relations meetings, AGMs can be made inaccessible due to timing or location (Apostolides,
2007; Seki, 2005). A recent example is BP which operates predominately in the USA but held its AGM in the UK away from the local proximity of unhappy American institutional shareholders. Using Nigeria as a case study, we seek to understand how the control and organisation of AGMs impact on institutional shareholder participation in this form of governance.
The overall aim of this paper is to get an insight into the impediments and obstacles to institutional investor activism within the context of the Nigerian market. This will be addressed through the following research questions: (1) What role does wealth maximization play in institutional investor activism? (2) How do controlling shareholders affect institutional investor participation in activism? (3) What role do regulation and regulatory mechanism play in institutional investor activism? To explore institutional investor activism in Nigeria, qualitative interviews were carried out with nineteen institutional investors in Nigeria. These included mainly large investment/asset companies, pension funds and securities houses. We adopt an agency theory perspective complemented by principal-principal agency theory.
Based on the findings, we make the following contribution: Firstly, we suggest that this paper sheds light on how three factors, namely; the dominant pursuit of wealth maximization, controlling shareholders and corporate governance regulatory mechanisms, can instead of facilitating communication and engagement between institutional shareholders and executives, act as hindrances and deterrents to institutional shareholder participation in activism. Specific to our study, we find that long-term monitoring was seen as conflicting with profit-maximization objective therefore it did not constitute a viable route to wealth maximization. Short-termism and the negative perception about activism were viewed as obstacles to institutional investor participation in activism. Family controlled companies resist monitoring and control. Also, institutional investor continual investment in this type of companies and passive approach to activism reflect their confidence in the management. Lastly, shareholders associations as principals compete with and act as substitutes to institutional investors in their role of activists. In addition, annual general meetings have become operational tools for resisting institutional investor interference in the

hands of management. In contrast to Anglo-Saxon countries where for instance in
USA, the Securities Exchange Commission’s regulation on communication and investment limit in companies can serve as an impediment, we find the pension regulatory approach to investment which restricts the size of portfolio in the capital market has a similar effect in Nigeria.
The rest of this paper is organized as follows: The next section conducts a literature review on the impediments to institutional shareholder activism, which is followed by an examination of the corporate governance environment and the nature of institutional shareholder activism in Nigeria. The research methodology of this study is subsequently presented. Next we discuss our findings, which precede a summary of the paper as well as the conclusion.
LITERATURE REVIEW AND RESEARCH AGENDA
Theoretical perspectives on Institutional Shareholders and Corporate
Governance
Principal-principal agency theory has been used to examine both institutional investors and family majority owners (Young et al, 2008). The principal-principal agency theory, a variant of agency theory, describes a situation where families particularly in emerging economies are the majority owners who are involved in the running of the company. These family owners have access to company information and are self-accountable. Therefore, the agent and principal role is tied in one body by virtue of their function and shareholding Institutional shareholders are not immune from this type of responsibility as they have meet their fiduciary responsibility to their clients and yet protect their investment as explained latter. This studies draws from two theoretical frameworks: agency theory and principal-principal agency theory.
Agency theory will form the main theoretical foundation of the paper while principalprincipal agency theory will be used to explain the combination of principal agent function for family ownership and institutional shareholders.
At this point, it is most appropriate to begin with a brief explanation of agency theory model which is beneficial in understanding institutional shareholder interest in monitoring (Daily et al, 2003). Agency theory provides a model for understanding the relationship between shareholders (principals) and management (agents) where the later contracts the former to adopt appropriate measures to protect and maximize shareholders’ wealth (Fama and Jensen, 1983; Jensen and Meckling, 1976). Agency problem occurs where agents deviate from the agreed objective and prioritize themselves over the principals through the fulfilment of self-interest at the expense of the principals’ interest. This has been examined in studies by Admati et al, (1994),
Dalton et al., (1998) and Dalton, et. al (2007).
In the case of an individual shareholder, the agency relationship is straightforward, as the shareholder is faced with the supervision of the agent and has to bear the cost of monitoring (Karpoff, 2001). In the case of institutional shareholders, the relationship is slightly more complex, as they act as both principals and agents (Smith,1996;
Holland,1998; Ingley and Van der Walt (2004). As principals, they have a fiduciary obligation to supervise and monitor the agents managing their investments, and as agents, they are required to act in the best interest of their clients (for example, pension funds) which still gives room for their own self-serving behavioural

tendencies. For institutional investors in Nigeria with direct equity and majority stake which legally guarantees the right to hold board positions and contribute to decisions concerning corporate strategy, the structure illustrates a case of principal-principal agency relationship within the target company.
Thus the implication for institutional shareholders is that they are faced with two types of peculiarities which constantly need to be taken into consideration: the principal and the agent function (Admati et al, 1994; Turnbull, 1997). For example, some categories of institutional shareholders such as hedge funds actively monitor their portfolios as principals, partly as a result of their non-diversified investments, which make them keener to monitor (see Hawley and Williams, 1997). Also, institutional shareholders (fund managers) as agents are constantly seen prioritizing their interest over that of their clients to maximize their profit (Davis, 2005). This makes monitoring less effective, thus impeding the effectiveness of their role as principals. This paper recognizes the agency features of institutional shareholders function, therefore we shall integrate both principal and agent dimensions of institutional shareholders role in the empirical discussion as promoted by ‘principal– principal agency theory’.
As principals, institutional shareholders have been known to engage in governance activism. (Black, 1992; Davis and Thompson, 1994 Monks and Minow, 1991;
Romano,2001; Wahala,1996) Corporate executives have found their actions constrained by not only this group of investors but other corporate governance mechanisms i.e. regulatory controls (Aguilera and Cuervo-Cazurra, 2004; Uddin and
Choudhury, 2008). Corporate governance mechanisms form part of the institutional frameworks and standards that dictate the acceptable and expected behaviour of agents (Hawley and Williams, 1997). Theoretically, corporate governance mechanisms can be described as “economic and legal institutions that can be altered through political process” (Shleifer and Vishny, 1997, p. 738). More broadly, corporate governance is described as a “system of laws, rules, and factors that control operations at a company”
(Gillan and Starks, 1998, p2). Laws and rules are important constituents of corporate governance, supported by an institutional framework which provides guidelines on board roles and composition, procedure and timing of annual general meetings, shareholding structure amongst others, in an attempt to regulate corporate conduct and provide clarity to stakeholders on expectations.
Overall, agency theory provides a useful platform to explore the impediments to institutional investor activism allowing the authors to categorise the outcomes into two dimensions: corporate governance and non-corporate governance driven factors.
This broad approach to understanding these issues is based on the assumption that corporate governance is “concerned with structures within which a corporate entity or enterprise receives its basic orientation and direction (Rwegasira, p.258, 2000).
“Structural mechanisms must be in place to assure that the managers are closely monitored and incentivized and the principal-agent conflict is avoided……The identifiable structures include board, ownership, legal; system and the market for corporate control” (Judge et al, p 260, 2010).

Institutional Shareholder Activism and Corporate Governance
Gillan and Starks (2003) acknowledge that institutional shareholders play a vital role in corporate governance through their monitoring and influence of corporate strategic direction and decisions. Indeed institutional shareholder activism as a monitoring mechanism is becoming influential in changing corporate governance practices
(Smith, 1996, Karpoff, 2001). Institutional shareholders monitor not just their investments but are paying attention to management policies (Bainbridge, 2005). In this paper, the words ‘monitoring’ and ‘activism’ are used interchangeable. According to Hawley and Williams (1997, p209) “monitoring describes the informal and formal ways institutions seek to influence the performance of corporations. Monitoring may range from ad hoc and informal responses to a crisis”. Monitoring is interwoven into activism as the steering wheel. Bianchi and Enrique (2001, p 8) illustrate this through their description of institutional shareholder activism as;
“the monitoring of the performance and governance of portfolio companies by institutions (i.e. mutual fund management companies, pension funds, insurance companies, individual portfolio management companies and so on), coupled, if necessary, with proactive efforts to change firm behaviour or governance rules”.
Furthermore, institutional shareholders have an incentive to monitor their portfolio due to the large size of their investments (Bainbridge 2005). In addition, as their financial assets grow, it is only reasonably that institutional shareholders adopt more protective strategies akin to monitoring. This has been recognised by researchers as valuable in contributing to improved corporate governance (Bainbridge, 2005;
Bebchuk, 2005). Also, institutional shareholders have a comparative advantage to individual shareholders in monitoring, which can be attributed to their access to information and block holding which effectively strengthens their voting power.
Visibly, this is traceable to the growth of institutional investments across the globe which has had implication on the traditional role of institutional investors as active shareholders (Gillan and Starks, 2003).
The field of institutional shareholder activism has been dominated by public pension funds and hedge funds. (Judge et al, 2010; Romano, 2001) For instance, in the US, the
Teachers Insurance and Annuity Association-College Retirement Equities Fund
(TIAA-CREF) and the California Public Employees’ Retirement System (CaIPERS) continue to spearhead shareholder activism (Carleton et al, 1998; Smith, 1996). For these organisations, institutional shareholder activism provides a lens through which the legitimate concerns of activists are channelled in order to achieve governance reforms. This brings to bare the governance practices that are considered appropriate, favourable and in the interest of shareholders (Daily et al, 2003). For example, the broad spectrum of governance reforms that have formed part of institutional shareholder proposals include confidential voting, corporate takeovers, poison pill, executive compensation, board nomination and independence (Bainbridge, 2005;
Romano, 2001; Partnoy and Thomas, 2007).
However, the soft issues pursued are still a topic of debate as Bainbridge (2005) argues that some of the agenda tackled by institutional investors show that little effort is being put into activism. On the other hand, Romano (2001) argues that identifying

the right governance reform agenda within the appropriate legal framework is a challenge. Therefore, not only are institutional shareholder efforts misdirected, marginal results are obtained. For instance, whilst institutional shareholders are interested in ensuring that there is proper representation of independent directors on the board, Hermalin and Weisbach (1991) do not find evidence that the presence of independent directors improves financial performance. On the contrary, Ravina and
Sapienza (2009) find evidence that independent directors are privy to information which gives them a competitive advantage, which allows them to gain abnormal returns from the sale of stocks. Ordinarily, this evidence should inform the decisionmaking process as this suggests that directors can also be opportunistic and prioritize their goals over shareholders (Bebchuk and Weisbach 2010). On executive compensation, despite the evidence on the abuse and growth of the latter (Kaplan,
2008; Tosi et al, 2000), institutional shareholders do not have the power to effect changes as voting outcome on directors pay is non-binding. This is the predominant situation in the UK, the USA, Netherlands and Nigeria (Cziraki et al, 2009; De Jong et al, 2006; Prevost and Rao, 2000). Although in some cases, institutional shareholders have been able to pressure directors into reconsidering their proposals on executive compensation.
Whilst institutional shareholders may need to re-evaluate their strategies of engagement with corporate governance, it must be recognized that diverse factors such legal rules can hamper effective institutional shareholder activism. The impediments are driven by various factors which can be classified into corporate governance and non-corporate governance driven factors. The corporate governance driven factors are hinged upon the legal and regulatory framework (see Bainbridge,
2005; Roe, 1994). For example, Bainbridge (2005) noted that rules have restricted institutional shareholders’ activities in relation to monitoring and influencing corporate decisions in the USA. Regulations on insider trading have made shareholders more cautious and discouraged shareholder co-ordination as well as communication. Netherland faces similar regulatory obstacles where only directors are allowed to sponsor proposals except a shareholder has up to 1% stake in the company (Cziraki et al, 2009). In sum, the regulatory environment can constrain institutional shareholders from active monitoring of firm’s governance.
Three essential non-corporate governance driven factors, including the protection of business relations, conflict of interest, as well as the cost of activism constitute key driving forces that influence institutional shareholder willingness to engage in activism. Firstly, Brickley et al (1988), Coffee (1991), Pound (1988) all refer to pressure sensitive institutional shareholders that consider the protection of their business relationship as priority over governance. According to Monk (1996), institutional shareholders show a greater preference for maintaining a business relationship with their target companies and this supersedes their trust responsibility to their clients. This stance is easily explained by the absence of suitable regulation to minimize the conflict of interest in many jurisdictions. Secondly, Ryan and Schneider
(2002) and Monk (1996) agree that the cost of activism can constitute a hindrance to institutional shareholder involvement in monitoring. Monk (1996) states that the issue of cost is even more apparent when institutional shareholders are faced with risks to their reputation. Shareholders also avoid bearing the cost of activism where it will harm their profit (Bainbridge, 2005). In the next section, we examine institutional

shareholder activism within the context of the Nigerian market as this is integral to our discourse.
INSTITUTIONAL CONTEXT: CORPORATE GOVERNANCE AND
INSTITUTIONAL SHAREHOLDER ACTIVISM IN NIGERIA
Nigeria, Shareholders and the Corporate Governance System
With 150 million people, Nigeria is the most populated country in Africa and has one of the most vibrant economies in region (KPMG, 2008). Nevertheless, Adegbite and
Nakajima (2011) noted that discourse on corporate governance in sub-Saharan Africa, particularly Nigeria, is at a developmental stage because the viable institutional machineries for effective corporate governance have only started to evolve in developing Africa. For example, they pointed out that up until the economic reform agenda embarked upon in 2004 by the Nigerian government which led to the revival of the Nigerian Stock Exchange (NSE), Nigerian corporations have conventionally not seen the stock exchange as a means of raising new capital. Habitually, this impeded the ability of the NSE to act as a market for corporate control (Adegbite and
Nakajima 2011) and the country’s capital market has meant very little in constituting an important infrastructure for regulating corporate governance.
Further to the economic reforms, the capital market capitalisation witnessed significant development as seen in Table 1.
-------------------------------------------
INSERT TABLES 1 and 2 ABOUT HERE
-------------------------------------------
The equity investment in the capital market has also risen exponentially.
See Table 2.
By March 2010, the equity market capitalization was N6.28 trillion
1
in the Nigerian market, having suffered from a loss of about N1trillion due to the 2009 global economic recession. As Table 3 further indicates, the banking industry was the most capitalized sector constituting one third of value at N2.90 trillion. It is also important to note that many of top twenty gainers recording the highest levels of capitalization were controlled by majority shareholdings (SEC, First Quarter magazine, 2010). See table 3.
-------------------------------------------
INSERT TABLE 3 ABOUT HERE
-------------------------------------------
The developments in the capital market and equity ownership in Nigeria can be attributed to a body known as the Technical Committee on Privatisation and
Commercialization (TCPC), which supervised the sale and privatization of government corporations which eventually gain listing status. The TCPC has always emphasized the presence of majority shareholders that have financial resources and skills to manage corporations. Thus, the shareholding structure of Nigerian corporations has a strong presence of very powerful majority shareholders (Ahunwan,
2002; Okike 2007; Oyejide and Soyibo, 2001; Yakasai, 2001). In order to protect the interests of the highly dispersed minority shareholders, the Technical Committee on
Privatisation and Commercialization formed shareholders’ associations in each of the seven zones where there was a stock exchange branch in Nigeria.
1 As at 8 th May 2011, 1.00 US dollars = 154.65 Nigerian naira

These shareholders associations were expected to take over board roles formerly occupied by government officials and represent the interest of the minority shareholders who purchased shares during the privatisation programme. Over the years, the number of shareholders associations has grown and their role evolved into that of ‘activists’ who keenly monitor the corporate governance policies and practices of quoted companies in Nigeria (Adegbite, et al, 2010; Amao and Amaeshi 2008;
Okike 2007). They are always at the centre of the media spot light regarding their
‘protestation’ at annual general meeting (Adegbite, et al, 2010). For instance in 2003,
African Petroleum (AP) was embroiled in a scandal over a concealed large debt which resulted in a loss of N2.79 billion in 2001 by the management and auditors. The shareholders associations present at the annual general meeting voted out some board members.
“…..Shareholders of African Petroleum Plc (AP) over the weekend in Asaba, Delta State took vital decisions to restructure the embattled petroleum marketing company, dropping two directors, its six-man audit committee and external auditors in what they described as a break from the past. ........Shareholders immediately rejected the motion to re-elect the four directors by single resolution, a development that set the stage for individual re-election…..Following what has been described as concealment of information and records by the past management…… (Thisday, 18 th
November,
2002)
The expression of shareholders displeasure has also revolved around the sale of company assets, protection of shareholders right, voting rights, dividend payments and the financial performance of companies (See Chigbo, 2000; Aderinokun, 2003).
In some situations, shareholders associations have taken their grievances to court, company AGMs and private meeting with management. Large shareholders associations such as the Independent Shareholders’ Association of Nigeria (ISAN), the Nigerian Shareholders’ Solidarity Association (NSSA), and Ibadan Zone
Shareholders Associations of Nigeria IBZAN have recorded successes in the past years. Against this backdrop, shareholder associations are seen as more publicly active than institutional shareholders in promoting changes in corporate governance in
Nigeria, although Adegbite, et al, (2010) noted that the latter retain huge potential for promoting effective corporate governance.
On governance of corporations, Nigeria inherited the UK system of company law.
The development of corporate governance began with the Companies Ordinance of
1912 which was based on the UK law. It was later replaced with the Company and
Allied Matters Act of 1990 (CAMA, 1990) which is administered by the Corporate
Affairs Commission (CAC). Companies are incorporated under the Act which also outlines the way corporations in Nigeria should be governed. CAMA (1990) dictates the responsibilities of the board, auditors and shareholders and outlines the rights and expectations of shareholders. The Securities Exchange Commission (SEC) monitors compliance by listed companies to SEC regulatory requirement. In particular, the SEC developed the ‘Code of Corporate Governance in Nigeria’ (SEC Code) in order to complement the existing legal framework of corporate governance in Nigeria. A

revised version of the SEC Code was released on 1st April 2011 (Adegbite and
Nakajima 2011).
According to CAMA (1990), the board is accountable to the shareholders. However, board appointments are driven by political, ethnic and religious affiliations (Adegbite and Nakajima 2011; Ahunwan 2002). Also, board fighting has been linked to high concentration of ownership particularly amongst banks where there is strong family
(majority) control or the institutions are treated as a one-man entity (CBN, 2006).
Yakasai (2001) also argues that the government and families have used their majority shareholdings to make appointment in return for favours in the past. This has largely been done with limited considerations for experience and competence. A survey conducted by Ogbechie and Koufopoulos (2007) find that the average board size was
7.8 members with the average proportion of non-executive directors were 85%.
Despite this result, they note that independent directors are in the minority with executives frequently appointing friends and large shareholders as non-executive directors on boards leaving fewer spaces for truly independent directors. CAMA supports majority shareholders occupying board position and the SEC Code advocates that shareholders holding more than 20% in a company should be represented on its board.
Statutory meetings present a forum for directors and shareholders to exchange ideas and agree on resolutions/decisions regarding directorship appointments, approval of the annual report, executive remuneration, appointment of auditors, and dividend payment. The various types of meetings provided for in CAMA include annual general meetings, extra-ordinary meetings and class meetings. The directors have a duty to inform the shareholders about the meeting; location, agenda and time by giving a proper notice in accordance with the stated requirement (See Inyang 2009).
The SEC Code requires the directors to choose a location accessible to the shareholders. Where the directors fail to hold an annual general meeting, shareholders
(s) with over 5% can call a meeting. The SEC regularly monitors statutory meeting proceedings by quoted companies to ensure regulatory compliance. However inadequate enforcement and sanctions to errant companies are not enough to deter non-compliance (Adegbite 2011; Okike 2007). For example, there was a complaint by shareholders to the SEC about the conduct of board members of a large quoted
Nigerian petroleum company, Conoil. In this case, the chairman and executive directors have been consistently absent at the annual general meetings. SEC’s response to this problem as stated in its report was that the situation could only be monitored because
The Legal Department was of the opinion that the provisions of CAMA did not prescribe sanctions against a Chairman or Managing Director who absents himself from AGM. The Code of Corporate Governance also had no sanctions for its violators (SEC, First Quarter magazine, p.70, 2010)
However, unlike the 2003 SEC code, the 2011 revised version maintains that its provisions are intended to be enforceable, in order to promote the highest standards of transparency, accountability and good corporate governance in public companies, without unduly inhibiting enterprise and innovation (Adegbite 2011).

Institutional Shareholder Activism in Nigeria
Institutional shareholders in Nigeria consist of pension funds, mutual funds, insurance companies and asset & investment companies/banks. On mutual funds, in 2010 there were 42 registered funds, up from 20 in 2002. Most of these funds are predominantly open-ended funds with a large proportion operated by asset/investment companies in accordance with Investment and Securities Act (1999) (Ibrahim, 2005; SEC, First
Quarter magazine, 2010). In the insurance sector, the reform in 2005 requiring increased capitalization amongst insurance companies has resulted in a reduction in their numbers leaving only 49 insurance companies in that year (KMPG, 2008;
Okonjo-Iweala and Osafo-Kwaako, 2007). Pension funds are regulated by the
Nigerian Pension Commission (NPC) under the Pension Reform Act (PRA) (2004).
The pension funds are managed by pension fund administrators in Nigeria who make the investment decision and the pension custodians that warehouse the funds. The
NPC also prohibits companies from investing more that 25% in quoted companies. As a result, we can see a pension company like ARM attempting to limit its investment to below 25% in Table 4. However, the PRA mandated a compulsory pension scheme for employees which resulted in the growth of the pension fund industry. Apart from quoted companies, SEC supervises quoted market capital operators (including all the types of institutional shareholders) and provides guidelines on the proportion of investment to be allocated to capital market activities and checks for compliance. For example, SEC monitors institutional investment funds to ensure that they do not exceed the approved limit of 5% in a particular company (SEC, First Quarter magazine, 2010). Overall, available data indicates that at the end of the third quarter of 2008, fund managers managed funds valued at N198.7 billions with N149.8 billion invested in the capital Market (SEC, Fourth Quarter magazine, 2008).
Yakasai (2001) identifies institutional shareholders in Nigeria as a shareholder class with a strategic advantage of being able to influence board nomination and bridge the communication gap with shareholders, and consequently play a crucial role in improving corporate governance practices. With the growth of market capitalization in the Nigerian market and the simultaneous growth of institutional investment, it has become necessary for institutional shareholders particularly those with substantial holding to act as ‘active monitors’.
In a SEC survey leading to the establishment of the 2003 SEC code, 18 companies indicated that they had dialogue with institutional shareholders. This is consistent with the finding of Yakasai (2001) that institutional shareholders had dialogues with management (See also Ajogwu, 2007). The SEC Code (2003) encourages institutional shareholder activism “. It states that in Section 10 (a) that:
“The company or board should not discourage shareholder activism whether by institutional shareholders or by organized shareholders’ groups.
Shareholders with large holdings (institutional and noninstitutional) should act and influence the standard of corporate governance positively and thereby optimize stakeholder value”.
The limited scholarly attention paid to institutional shareholder activism in Nigeria could be attributed to the silence of institutional investors in the face of scandals or their lack of enthusiasm towards activism. Despite the myriad problems (such as

board and managerial corruption and the laxity in regulation) which confront corporate governance and shareholder activism in Nigeria, the relevance of institutional shareholder activism in promoting effective corporate governance practices cannot be overemphasized. Therefore, one questions the lack of visibility amongst institutional shareholders in Nigeria. The safeguard of shareholder wealth by institutional investors in a turbulent environment such as Nigeria is paramount, especially with incidents of corporate crisis and accountability problems, including situations where boards have been accused of being ineffective and corrupt and where auditors have conventionally failed in their fiduciary duty (Bakre, 2007; Ahunwan,
2002; CBN, 2006; Okike, 2007). However, this discourse is highly limited in the corporate governance and accountability literature in the developing economies of
Africa. This no doubt motivates our subsequent examination of the impediments to institutional shareholder activism in countries with weak corporate governance practices.
RESEARCH METHOD
To examine the obstacles to institutional shareholder activism in Nigeria, 19 semistructured interviews were carried out with nineteen institutional shareholders in
Nigeria. The interview profile included 11 participants from senior management team namely Executive directors, Vice presidents, Head of investments etc and 8 participants represented by research analysts, research associates and investment analysts were interviewed. The interviews were conducted in the last quarter of 2008 with institutional shareholders at Lagos and Port Harcourt. The financial institutions consisted of asset/investment companies, securities houses and pension houses.
However, insurance companies were exempted from the sample because of the difficulty in identifying insurance houses that had mutual funds. Whilst a few appointments were booked in advance, the majority of the interviews were booked within a short time frame of meeting the prospective participant, as the use of diary appointments is not very popular in Nigeria. Websites were found to provide valuable information on institutional institutions in Nigeria especially with regard to their senior management as well as contact details.
The interviews were conducted at the corporate offices of the interviewees. The interviewees were given a form to complete to capture the demographic details of the participants and institutions. The interviewees were promised anonymity. Therefore, numerical codes have been used to hide their identity. A formal set of questions were followed during the course of the interviews. The interview questions were tested in a pilot process twice and improved upon based on feedback before the main interview.
Questions also evolved during the interview process. The interviews lasted for an hour on average. Interviews were tape recorded and the data was later transcribed. Hand written notes were used to support the data gathering process. The interviewees were asked to comment on different aspects relating to institutional shareholder activism including challenges, investment decisions, engagement, impediments and corporate governance. They were encouraged to speak exhaustively on the topics. The data was analyzed using codes, themes emerged and this is discussed in the empirical section.
This is highlighted in the in the empirical section. Interviews proved appropriate in investigating how institutional shareholders perform their functions and the impediments they face as activists. It brings the experiences of institutional shareholders closer to the observers by developing a pictorial representation of their

feelings, experiences and their past actions. Nonetheless, interviews are prone to subjectivity and bias, as interviewees may fail to fully recount the story and may emphasize selected bits of their experience (Shotter and Gergen, 1994). This paper recognizes this bias and cognisance is taken to acknowledge disagreement and consensus.
DISCUSSIONS OF EMPIRICAL EVIDENCE
This section examines and discusses the findings from the interviews with institutional shareholders in Nigeria. The discourse is categorised under three themes.
We initially examine the concept and practice of wealth maximization and the associated impacts on institutional shareholder activism in the Nigerian corporate governance context. Then, we examine the roles of a variety of controlling shareholders and their roles/influences on institutional shareholder activism. Lastly we consider the institutionalised regulatory corporate governance mechanisms and how they affect institutional shareholder activism. For the most part, we uncover evidence of how these factors impede effective institutional shareholder activism in
Nigeria. In doing this, we make use of raw extracts from our data to better facilitate useful deductions, and ensure a clearer link between our findings and analysis.
Wealth Maximization and Institutional Shareholder Activism
We found that most institutional shareholders especially the pension funds in Nigeria showed a negligible commitment towards institutional shareholder activism as this was viewed harmful to wealth maximization. There was a strong preference for an exit option (selling their stakes). A pension fund manager explains “o nce we detect the company is not doing well, we merely liquidate (B10). Institutional shareholders such as these did not perceive liquidation as a way of engaging in institutional shareholder activism but an actual avoidance strategy, primarily premised on wealth maximization. This is in contrast to views from McCahery, et al, 2009) which indicate that some literatures consider selling off (exit) a strategy in activism (see also Gillan and Starks 2003). However, this is consistent with the argument of Admati and
Pfleiderer (2006) that it is impossible to engage in monitoring by adopting an ‘exit option’.
Based on the field evidence, liquidation offers institutional shareholders in Nigeria a means to preserve their wealth instead of participating in activism to promote good corporate governance. Another pension fund manager explains the usual actions taken if it is perceived that it would be impossible to achieve the desired returns
“we will vote with our feet up, it has nothing to do with corporate governance”
(B1). We find that institutional investors particularly pension funds prioritise the safeguard of their wealth and are less eager to invest in governance. “
They are watching their investment very closely instead of them putting in corrective measures; they sense something (is wrong) their own proactive approach is to divest ” (B4). Invariably, the desire of institutional shareholders is to satisfy and maximize their own interest in the market
(Wahal, 1996). Therefore, it was not surprising that the notion of business interests continued to emerge during the interview discussions. Institutional shareholders were of the opinion that their business interests faced threats if their institution was linked to activism that involved forms of aggression and opposition towards management.
Also, activism was seen as damaging to their brand, reputation and customer base which can have eventual consequences on their financial returns. As a respondent

stated:
There is a network. No organisation operates within a vacuum. There is this interdependency. If you push yourself at the fore front and you try to fight a cause without looking at the consequences, other companies may be watching and it may be reported in paper that you pioneered such a fight, and it may make you lose you brand or patronage …(B12)
One fund manager also describes the perceptions of some institutional investors on shareholder activism as follows: “
We look at it [shareholder activism] as an act of indiscipline to engage in such activitie s” (B19). Most institutional shareholders expressed an inclination to remain profitable as a business and this was perceived as conflicting with long-term monitoring leading to a clear lack of interest in activism. In our interviews, evidence of institutional shareholders paying particular attention to their business interests comes to light as highlighted in these two quotes.
“We take positions but our positions are purely investment (driven). We are not cut out for remaining in that company for such activities as shareholder activism.” (B11).
Institutional shareholders also viewed monitoring as time consuming. Avoiding long term investment that involved continuous monitoring and activism implied fund managers could maximize their wealth, as suggested by another respondent as follows:
“…….except you do not have any other business and you are just intent on taking over companies……. we have our business to do, we have returns to give, we have a business, we have to pay pension… ..” (B4)
Hansen and Hill (1991) argue that the performance measures that are applied by institutional shareholders are short sighted, emphasizing mainly profitability. In an interview, one respondent (a fund manager) commented on the eagerness of institutional shareholders to dispose of their stock in the promotion of business interest. He stated that the ‘year-end’ of an institution influences its drive for profitability. It was quite important that
“(1) it will be recorded that you made significant profit from your investment and (2) you will have less cash flow that is tied down in stock in your investment portfolio ” (B12). This situation reflects the presence of a principal problem where institutional shareholders want their institutions to be viewed as a profitable institution and are less concerned about monitoring the agent. Also, the value of pursuing better corporate governance practices in the target company is relegated to the background.
Another impediment to institutional shareholder activism, as generated by our data, relates to the cost of monitoring. Institutional investors can reduce their expenditure on shareholder activism in order to maximize their wealth. Indeed respondents acknowledged that activism required significant cost. Therefore, to properly participate in activism, institutional shareholders needed to be in a position where there is “ provision of adequate funds allocated to such endeavours”
, as suggested by an interviewed fund manager (B6). Another respondent relates the level of participation in activism to monitoring cost as follows: “
Why we do not have pronounced institutional shareholder activism is because of huge capital involvement
” (B12).This is consistent with past studies (Roe, 1994; Pozen, 1994;
Romano, 2001), that notion of cost benefit is similar in this regard because institutional shareholders are unwilling to bear the cost of monitoring if it outweighs

the benefits. It should be noted that overall, five out of nineteen institutional shareholders were able to identify traces of institutional shareholder activism in
Nigeria and acknowledged that they engaged in activism with pension funds in the minority.
In summary, the overriding indication from respondents was that institutional shareholder activism came at a cost to their business financial interests and relationships with investee companies, a sacrifice which they were unwilling to take on. Gillan and Starks (2003) indicate that the protection of business interest and generating maximum return was paramount to institutional shareholders. Therefore, there is a low incentive for institutional shareholders to engage in activism (Romano,
2001). This is consistent with the findings of Pound (1988) and Brickley et al (1988).
Specific to our study, we find that activism was not deemed fashionable by institutional investors in the corporate world. Long-term monitoring was seen as conflicting with the profit-maximization objective, therefore it did not constitute a viable route to wealth maximization. Consequently, short-terminism towards wealth maximization by institutional investors accounted for their lack of enthusiasm towards institutional shareholder activism. .
Theoretically, Bainbridge (2005) stated that the benefits of activism is unattractive, especially with the high cost of monitoring and fewer evidence of increased firm value/performance, which makes it common for institutional investors to take a passive approach towards activism. In line with agency theory, we argue that based on the results, the principal adopts either one of two strategies: act as a silent principal, remain in the firm and continue to partake in future returns where it is deemed satisfactory or divest, seeking other profitable ventures run by other agents and redistributing investment. In essence, the principal avoids substantial agency cost.
However, we do have a principal problem where the principal is unconcerned about the interest of the agent (long term survival of the firm) but vigorously pursues selfinterest through sell-off thereby engaging in investor opportunism. We propose that there are two principals that spur institutional investor towards wealth maximization instead of activism: the first principal (the institutional investors), seeking to maximize the return of the institutional investor and the second principal (the shareholder-client) whose return is also maximized in the process.
Controlling Shareholders and Institutional Shareholder Activism
Ownership of block holdings and coalition of large holdings were also identified by respondents as impediments to institutional shareholder activism. In this section, we examine family ownership and majority shareholding by management and investor groups whose activities impede institutional shareholder activism.
To start with,
Anderson et al ( 2007, p791) note that “agency theory predicts owners, if they have the capacity to do so, will act to protect their interests in the companies in which they have a significant ownership stake”. It is therefore not uncommon to find individual owners in family-run businesses controlling a quoted company particularly in emerging markets. Individual owners make a better substitute to diverse shareholders as advisers to a chief executive given that the sum of diverse interests involved in the decision-making process is reduced in such a case (Hendry, 2002).
Traditionalism plays an important role in family-run businesses with family members assuming executive roles and controlling the company (Uddin and Choudhury, 2008).

Indeed there was consensus in the findings of this study that it was not feasible to influence quoted companies that are controlled and owned by families. In Nigeria, family members usually constitute core shareholders and take up executive positions within the company thereby strengthening their ability to exercise greater power. This is consistent with the findings of Adegbite and Nakajima (2011). Such family ownership structures impede monitoring and activism as institutional shareholders struggle to exercise their votes or influence the strategic direction of the company. As suggested in this interview extract:
…....there is a factor in Nigeria called monarchy, mona factors- my family owns this business. They keep on controlling it.. no matter how much you invest in
'Company D' today, you will not have any influence …no matter how much you invest in ‘X Communication Company’ today, Mr R is not going to give way.......
Some banks in Nigeria are still controlled by families, such as bank X. (B8)
Furthermore, findings indicate that the successful entrenchment of dominant family ownership and strong presence on the board is facilitated by the institutional confidence in management’s ability to appropriately manage the corporate affairs effectively and generate returns. Responses indicate that families are viewed as having strong skill-set in a type of business, valuable network and huge personal preference to prioritise profit making, despite the record on weak corporate governance practices. For example, an interview respondent noted as follows:
We do not think it is worth the while with your little shareholding you go and start prompting these changes and even if you do, remember the first reason why we were able to make the investment is because we believe in the management and what is going on in that place (B4)
The confidence in family run businesses is consistent with the results of Denis and
Denis (1994) who do not find any evidence that companies that are family owned and run underperform. This further indicates that family controlled firms may inherently constitute an impediment to corporate monitoring and intervention by institutional investors.
Majority shareholders further have a strong influence on corporate strategic direction through the voting process and negotiations (Bainbridge, 2005; Carleton et al, 1998).
This can be attributed to the power dynamics which favours majority shareholders and is facilitated by the proportion of shareholding. In Nigeria, this imbalance of power is observable as shareholders form coalition. As a respondent puts it:
“To a large extent, these medium –large shareholders know themselves, and since they are very few, they are able to form upper cartels”
(B8). With their large block holding, institutional shareholders and executives have been known to consult with this crop of large individual shareholders because of the impact their shareholding would have on voting outcome.
The way we work is essential to use activism in the context of going in there singular or together with selective shareholders forming a clout to form a sizeable stake to make and influence and work with management to improve things……..
I do not need to go all over the place, all I just need to find 20% shareholders that will account for 80% of the shares I do not have….. (B3).

Another respondent noted that “ most companies in Nigeria will have cleared/sorted the issues with their major shareholders before coming to the AGM” (B1). This puts majority shareholders in a position where they are more informed than other shareholders giving the former a comparative advantage (Parrino, Sias, and Starks,
2003). Also, institutional shareholders have to partner with majority individual shareholders if they are to safeguard their interest. This makes institutional shareholders involved in limited monitoring susceptible to the dictates of controlling shareholders.
Institutional shareholder activism is further impeded in Nigeria through control by managers. Managers accumulate voting right through proxies by encouraging employees to make ‘internal purchases’ of company shares to increase employee stakes in the company. This provides directors with access to proxies and makes it difficult for other shareholders to vote them out of the board (Stout, 2007). At AGMs, management can exercise proxies, as “the majority of votes cast at general meetings are proxy votes of absentee individual shareholders and institutional shareholders”
(Stratling, p75, 2003). One respondent pointed out that executive directors in quoted companies in Nigeria still ensure that a substantial proportion of shares are allocated and purchased by employees.
I know some companies when they call for AGM most of the stocks are held by the staff like some companies, especially banks…… ….w
hen they call for an
AGM, they have already gotten the staff to sign off that they agree on any resolution that will be taken at the AGM ……..
Basically, there is no way of actually monitoring (B9).
As a result, the executives dictate the voting pattern by persuading staff to vote in favour of management proposal. This represents a peculiar obstacle to effective institutional shareholder activism, as it is the case in Nigeria.
Shareholders associations consist of small shareholders with various proportions of shares in different companies however a consolidation of the shares of their members results in large proportion of votes at AGMs (Strickland et al,1996). In Nigeria, there are many shareholders associations (Tijanni et al, 2009; Amao and Amaeshi, 2008;,
Yakasai, 2001). There are also reported incidents of shareholder (associations) confrontation with the board over corporate decisions (Okike, 2007).
The individual shareholders or association of shareholders, if they are aggrieved..….they go to AGMs where they have the power to change the board and to change policies. They ensure that they go to the AGM if they are not allowed they block the entrance of the AGM, they attract attention, they make noise and attract attention, go to the press and embarrass the company by so doing they call the company to discuss with them and they are able to air their views….(B11
)
Outside AGMs, shareholders associations in Nigeria have meetings with management as traditionally the latter listen to their concern. “
Companies are not indifferent to those shareholders associations”
(B3). The managers are not the only group that have to face shareholders associations, institutional investors also have to deal with them.

One fund manager that acknowledged that his institution engages in activism was of the opinion that reconciling their interest with shareholders associations was a challenge.
It may be that the company which has great growth prospects may needs to retain the cash to drive those growth prospects. It is very difficult to explain something like that at such level of shareholder association because they want more immediate gratification dividend upfront and so on……We have to meet with them and deal with them. We have to try very much to explain to them where we come from…. and that is quite difficult to do if you have to deal with them as associations (B3)
Furthermore, it was pointed out that some institutional investors look to shareholders associations to represent their interest. The presence of shareholders association in the corporate arena meant that some of these investors could afford to sit on the sideline.
A lot of institutional investors do not go into activism; they allow individuals and associations into activism and to fight their cause (B12). However, there is a problem when shareholders associations prioritize their interest over management. “
What we have is shareholders groups becoming tighter to stand for themselves simply
” (B16).
Another commentator referred to collusion between management and shareholders associations (see also: Adegbite et. al. 2010). He noted that this type of behaviour had frustrated their agenda in the past.
I also remember that during the banking consolidation in December 2005, I was in a meeting for 'A'. Bank A was supposed to be the last bank to take over the eight banks, ......... When we got to the shareholders meeting, the president of shareholders association [Y] in Nigeria, “I am sure that he was already influenced”. He stood up and said that well it is very painful we have to give in and join the alliance; some people were like 'no! no! no! no!' and before we knew what was happening, 10 people were raising their hand. They counted their shares and it is all over. (B8)
On the whole, shareholders associations were viewed as players to be reckoned with by institutional investors. The active participation of associations in monitoring can impede institutional investor activism in Nigeria when they pursue agendas that satisfy their self interest at the expense of the other investor group. Reconciliation of shareholders associations’ interest with that of institutional investors was viewed as a challenge by our respondents. However, some fund managers opined that shareholders associations were acting on their behalf and so were less inclined to pursue any form of activism.
In summary, we note that families holding majority shares particularly the head of the family are bound to control their company and resist outside interference from other investors. The institutional investors passive approach to activism is intensified by the confidence reposed on the management of family owned companies. Here, we have the ownership structure as defined by principal-principal agent theory pictured in the form of family control and participation in governance however the cycle of ownership is completed with institutional investors as minor principals. Also, interviews reveal that lack of support from large shareholders and management can pose a challenge to institutional investors with consolidation of shares becoming a

major threat in their bid to call management to account. Lastly, shareholders associations as principals compete with and act as substitutes to institutional investors in their role of activists.
Corporate Governance Regulatory Mechanisms and Institutional Shareholder
Activism
In countries with developed corporate governance structures, soft and/or hard regulation has constituted an effective mechanism in facilitating as well as impeding institutional shareholder activism (Black, 1998; Gillan and Starks, 2003; Gillan and
Starks, 2007). In Nigeria, our findings indicate that regulatory guidelines issued by the pension regulatory body (NPC) have constrained pension funds from active participation in activism. Pension fund managers noted that the regulation prohibited them from holding board positions as well as purchasing substantial shares in the capital market. As a fund manager notes
…. I cannot be on the board of any company because it is statutory for me
(pension fund) not to.
The maximum you can hold is 30% in any company. So it is quite negligible in the sense that you could actually influence things
…(B1).
The general view was that monitoring and control of the actions of the executives of a target company was feasible if they had controlling shares which enabled them exercise authority. “ if you have significant equity in a company, yes, you can have a say ” (B10). Therefore, with this constraint, it was quite common for pension funds constrained by regulatory requirement on the size of their holding to play a less active role in governance activism. As a respondents notes
Pension fund companies that are supposed to be very vocal in the affairs of the company do not seem to take interest in affairs of the company (B4).
Overall, the interviewees argue that the Nigerian pension reform has limited the powers of pension fund managers through regulation and access to voting documents.
Gillan and Starks (2003) reiterates that pension reform has a prominent role in determining the level of ownership and thereby the role played by institutional shareholders in monitoring. They argue that pension reforms can strengthen domestic pension funds as seen in emerging markets. In contrast, however, the pension reform in Nigeria has weakened the power of domestic pension funds. Unlike studies on
Anglo-Saxon countries which highlight the role of the Securities and Exchange
Commission in impeding institutional investor activism, our study finds the Pencom, the pension fund regulator in Nigeria, by virtue of the guidelines on investment has contributed to the low participation of institutional investors in monitoring as they are unable to become large shareholders.
Furthermore, annual general meetings (AGMs) are part of the corporate governance structure which provides corporations with guidance and directives on shareholder communication (Hodges et al, 2004; Rwegasira, 2000). AGMs provide a forum for discussions, making resolutions and information dissemination to shareholders
(Strätling, 2003). Basically, an AGM is intended to harness the input of shareholders of the company while offering a legal structure to both shareholders and the board to formally interact and reach an agreement. Theoretically, this implies that AGMs are welcoming environments that offer fair representation of interest on corporate affairs.
In practice, Yakasai (p.239, 2001) stated that ‘until recently, the AGMs of many large

corporations were fait accompli , merely to rubber stamp government appointments and directives”.
An interview respondent notes as follows: AGM or any type of meeting where resolutions are being made is a formality (B8). “ The proxies have voted before what is being put to vote in any case so usually it is a fate accomplished” (B1). This type of experience spearheaded by companies was also extended to institutional shareholders.
Their consent was received on issues before the AGM. This is consistent with the argument by Yakasai (2001, p.241) where he notes that institutional shareholders collude with the board before AGM. Therefore, AGM and extra ordinary meetings did not facilitate activism for some other institutional shareholders and was viewed as a well-rehearsed ritual. A respondent expressly states as follows:
Talking of some factors that might influence the strength of shareholders activism, there is politicking that follows extra ordinary meetings.. .....where institutional shareholders come or there is going to be a takeover, merger or even sometimes change of directors and stuff like that. I want to give you a very typical example last year when bank A tried to take over bank B without their consent i.e. hostile takeover. They started by buying their shares indirectly and when they were able to get substantial shares may up to 20, 25% they started talking to block holders. On the day they got to the meeting, infact 10-15% shareholders present where able to pass a very serious resolution.......there is politicking to the extent that the shareholders influence is not always genuine
(B8).
In contrast to studies from developed countries (Apostolides, 2007; Roberts et al,
2006) where it was indicated that institutional shareholders attend private meetings as against AGM, we find that both forum are relevant in the case of Nigeria. In developed countries, companies have been known to make the location and timing of
AGMs inconvenient for shareholders (Apostolides, 2007; Seki, 2005). In Nigeria, institutional shareholders also expressed their frustration at obstacles put by management to hinder them from participating in AGMs. Management were accused of providing short notice of AGMs and intentionally picking out an AGM venue that was at the outskirts of the city. According to a respondent, there was one recent
[AGM] which took place in a remote location (B8). As another respondent notes,
……..Now there is an AGM coming up......You get the notice 24hours before the meeting and when you look at the venue of the meeting you say 'how are you going to fly to Sokoto to attend the meeting? (B4).
The location of an annual general meeting in a ‘capital city’ which is difficult to access was considered a problem particularly where the location was far from the head office. It meant expensive accommodations that were fully booked and long haul fights. An interviewee decried his experience “ before you come all the big hotels and lodges are already filled up. Booked! You call them, they say they are full
” (B8).
Obviously, accommodation was important because ” the distance is far
” (B8). His opined that the management of the target company wanted “ to make sure that the wrong people do not have access to that meeting
” (B8). The general feeling amongst interviewees that discussed this subject was that management was intentionally trying to deter them from attending AGMs and exercising their rights.

……..if they knew a certain set of people come as a stumbling block in achieving their aim for that meeting. … they would do it in such a way that the person is not accredited to enter the venue of the meeting and before you know it, that agenda that they do not want that person to come and say’ hei I oppose’ is being taken before any other thing…… so institutional shareholders are not that active. They do not show strong interest….(B4)
The findings show that the location and timing of AGM and extra-ordinary meeting could serve as a disincentive for some institutional shareholders.
CONCLUSION
This article forges ahead a discourse on institutional shareholder activism in Nigeria.
Employing evidence from 19 interviews with institutional shareholders in Nigeria, this paper provides insights into the impediments to institutional shareholder activism in developing countries and specifically Nigeria. In particular, it sheds light on how three factors, namely; the dominant pursuit of wealth maximization, controlling shareholders and corporate governance regulatory mechanisms, can instead of facilitating communication and engagement between institutional shareholders and executives (as mainly posited in the extant literature on shareholder activism), act as hindrances and deterrents to institutional shareholder participation in activism. This paper has provided some insights into the rationale behind the lack of activism by institutional investors as well as the difficulties faced during activism. Furthermore, discussions have unearthed the constraints that are specifically linked to pension funds which affect their attitude towards long-term monitoring and thereby resulting in low level committal to activism.
Drawing upon the empirical results, we broadly contribute to corporate accountability literature by highlighting how corporate governance factors consisting of ownership structure arrangement/ shareholding (family ownership, management, shareholders associations) and corporate governance mechanism (Annual general meeting and regulation) as well as non-corporate governance factors i.e. wealth maximization factor impedes activism in the context of our study. Specifically, we find that longterm monitoring was seen as conflicting with profit-maximization and therefore did not constitute a viable route to wealth maximization. Short-termism and the negative perception about activism were viewed as obstacles to institutional investor participation in activism. In 2001, Yakasai reported of fewer shareholders associations and their minimal impact in the governance arena. However, in recent times where there has been a rise in the numbers of associations, institutional investors complained about having to deal with them. This was seen as quite challenging. Some institutional investors felt that shareholders associations were suitable substitutes for their role as ‘monitors’. Therefore, there was little need to engage with executives on the side of institutional investors. On controlling shareholders, La Porta et al, (1999) viewed the presence of controlling shareholders as having an impact on governance problems in quoted companies. This is also true for family ownership (Uddin and Choudhury, 2008).
We find that institutional shareholders tend to interfere less with the direction of corporate practice and strategy when the controlling shareholders are families or individuals. This is because family controlled companies resist monitoring and

control. Also, institutional investor continual investment in this type of companies and passive approach to activism reflect their confidence in the management. We also find that the support of large shareholders is important if institutional investors want to influence corporate decision making. In addition management protect their interest through the facilitation of ‘internal purchase’ of shares by employees to build their voting rights.
Also, the interviews unravelled how management can use the AGM process and location to their advantage and discourage institutional shareholders from participating. The examination of annual general meetings is interesting because it is considered a part of the corporate governance mechanism instituted to facilitate shareholder communication in Nigeria (SEC Code, 2003; 2011, Yakasai, 2001).
However, the results show that this objective can be thwarted. We note that just like
Anglo-Saxon countries where for instance in USA, the Securities Exchange
Commission’s regulation on communication and investment limit in companies can serve as an impediment, we find the pension regulatory approach to investment which restricts the size of portfolio in the capital market has a similar effect in Nigeria. This impinges on their ability to gain board appointments through majority shares. No doubt, “rules that enhance liquidity for passive shareholders can adversely affect governance by limiting monitoring by active shareholders” (Gillan and Starks 2003, p.9).
This paper offers useful practical relevance. With the growth of institutional investment in Africa particularly Nigeria (Stevenson, 2008), it is important that institutional shareholders understand how to engage in monitoring and the obstacles that hinder effective shareholder activism. Of equal importance to regulators would be how to create a balance between the prescribed guidelines and the effects on stakeholders’ effort to promote good corporate governance. The Pension regulator,
Pencom should also consider the impact and trade off linked with investment restrictions in the Nigerian capital market. Pencom needs to develop more effective measures that encourage better monitoring as the traditional approach of limiting the size of investment in the capital market and pension funds to invest in quoted companies with certain rating does not guarantee immunity from scandals (See the case Cadbury (Nigeria) Plc). Lastly, the SEC Code (2003;2011) states that annual general meetings should be made accessible to investors. In reality, annual general meetings are becoming inaccessible. This problem needs to be addressed.
Finally, the scope of our study is limited in some ways. The research did not attempt to distinguish between institutional shareholder characteristics or differentiate between their portfolio size and liquidity. It was also not our intention to delve deeper into other corporate governance mechanism besides controlling shareholders, annual general meetings and regulation. We, thus, acknowledge the potential for future research. Also, the evidence relied primarily on the views of institutional shareholders in nineteen companies. Whilst they provided useful insights into the subject, future studies could be expanded by widening the participants to include regulators, government officials, and management. Lastly the sample was restricted to only one
African country, caution must be exercised in making conclusive generalisations.
There are further opportunities for future research in this area. While the uniqueness of this study lies in its extension of existing knowledge on the impediments to institutional shareholder activism from a developing country perspective, ,it

recognises the benefits of opening this research to multiple country perspectives, identifying the cultural and legal characteristics of the environment as well as differentiating between investor categories.
References
Adegbite, E. (2011) ‘Corporate governance regulation in Nigeria’ Corporate
Governance: The International Journal of Business in Society, Forthcoming.
Adegbite, E., Amaeshi, K. and Amao, O. (2010) ‘Political analysis of shareholder activism in emergent democracies: A case study of Nigeria’
Centre for the Study of
Globalisation and Regionalisation Working Paper 265/10 Warwick Business School.
Available online: http://www2.warwick.ac.uk/fac/soc/csgr/research/workingpapers/2010/26510.pdf
Adegbite, E. and Nakajima, C. (2011) ‘Corporate governance and responsibility in
Nigeria’
International Journal of Disclosure and Governance, Vol. 0, 0, 1–20.
Aderinokun, K (2003) AGM shareholders flay WAPCO over sale of 'elephant.
Thisday. 5 th
September.
Admati, A. Pfleiderer P. and Zechner J.
(1994): “Large shareholder activism, risk sharing, and financial market equilibrium”,
Journal of Political Economy No102.
p.1097-1130.
Admati, A. Pfleiderer P. and Zechner J.
(1994): “The “Walk Street Walk” and
Shareholder Activism: Exit as a form of voice. Working paper
Aguilera, R. V. and A. Cuervo-Cazurra (2004). ‘The Spread of Codes of Good
Governance Worldwide: What’s the Trigger?’, Organization Studies, Vol. 25 No.3, p.
415–443.
Amaeshi, K. M., B. C. Adi, C. Ogbechie and O. O. Amao (2006) ‘Corporate Social
Responsibility in Nigeria: Western Mimicry or Indigenous Influences?’, Journal of
Corporate Citizenship 24(Winter), p83–99.
Amao, O. and K. Amaeshi: (2008) ‘Galvanising Shareholder Activism: A Prerequisite for Effective Corporate Governance and Accountability in Nigeria’,
Journal of
Business Ethics 82 (1), 119-130.
Ahunwan, B. (2002) “Corporate Governance in Nigeria”,
Journal of Business Ethics
Vol. 37, p 269-87.
Anderson, D. W. Melanson, S. J. and Maly, J. (2007) The Evolution of Corporate
Governance: power redistribution brings boards to life. Corporate Governance: An
International Review , 15 (5), pp. 780-797.

Apostolides, N. (2007) Directors v. shareholders: ‘evaluating corporate governance in the UK using the AGM scorecard. Corporate Governance: An International Review ,
15 (6), (September), p. 1277-1287.
Ajogwu, F. (2007) Corporate Governance in Nigeria: Law and Practice . Centre for
Commercial Law Development. Nigeria.
Bakre, O.M. (2007) The unethical practices of accountants and auditors and the compromising stance of professional bodies in the corporate world evidence from corporate Nigeria, Accounting Forum Vol.31 (3) p. 277–303
Bainbridge, S. M. (2005) Director primacy and shareholder disempowerment.
Harvard Law Review, Vol.119, p. 1735–1758
Bebchuk, L. A. (2005) The case for increasing shareholder power. Harvard Law
Review , Vol.118 (3), p. 833–917.
Bebchuk, L. A. and Weisbach, M. S. (2010) The State of Corporate Governance
Research. Review of Financial Studies, Vol.23 (3), p. 939-961.
Bianchi, M. and Enriques, L.. (2005) Corporate Governance in Italy after the 1998
Reform: What role for Institutional Investors?. Corporate Ownership and Control,
Vol.2(4), p. 11-31.
Black, B. S. (1992). ‘Institutional investors and corporate governance: the case for institutional voice’, Journal of Applied Corporate Finance, Fall, p. 19–32
Black, B. S. (1998) Shareholder Activism and Corporate Governance in the United
States . As published in The New Palgrave Dictionary of Economics and the Law,
Vol.3, p. 459-465.
Brickley, J. A, Lease, R.C., and Smith C.W. (1988) Ownership structure and voting on antitakeover amendments. Journal of Financial Economics, Vol.
20, p.267–291.
Carleton, W., Nelson, J., and Weisbach, M.(1998) “The influence of institutions on corporate governance through private negotiations: evidence from TIAA-CREF”,
Journal of Finance Vol 53, No. 2 ,p1335–1362.
Central bank of Nigeria (2006) Code of corporate governance for banks in Nigeria post consolidation. (March), p. 2.
Chigbo, M. (September 25, 2000) Newswatch (Lagos). Africa News
Coffee, J. (1991) Liquidity Versus Control: The Institutional Investor as Corporate
Monitor Columbia Law review , (October), p. 1277-1368.
Cziraki, P., Renneboog, L. and Szilagyi, P. G. (2010), Shareholder Activism through
Proxy Proposals: The European Perspective. European Financial Management,
Vol.16: p738–777

Daily, C.M., Dalton, D., Cannella, A. (2003) Corporate governance: decades of dialogue and data", Academy of Management Review , Vol.28, p..371-82.
Dalton, D. R., Daily, C. M., Ellstrand, A., & Johnson, J. 1998. Board composition, leadership structure, and financial performance: Meta-analytic reviews and research agenda. Strategic Management Journal, Vol.19 p.269–290.
Dalton, D. R., Hitt, M. A., Certo, S. T., & Dalton, C. M. 2007. The fundamental agency problem and its mitigation: Independence, equity and the market for corporate control. Academy of Management Annals, Vol.
1: p1–64.
Davis, G. F. 2005. New directions in corporate governance. Academy of Management
Review, Vol.14: p.57–74.
Davis, G. F. and T. A. Thompson (1994). ‘A social movement perspective on corporate control’, Administrative Science Quarterly, Vol.39, p. 141–173.
De Jong, A, Mertens, G.M.H., and Roosenboom, P.G.J. (2006) Shareholders‟ voting at general meetings: Evidence from the Netherlands. Journal of Management and
Governance. Vol. 10, p. 353-380.
Denis, D. J. and Denis D.K (1994): “Majority owner-managers and organizational efficiency”, 1 Journal of Corporate Finance p.
91-118.
Del Guerio, D. and Hawkins, J. (1998) The Motivation and Impact of Pension Fund
Activism. Journal of Financial Economic s, Vol.52, p. 293-340.
Fama, E. and Jensen, M. (1983) Separation of ownership and control. Journal of Law and Economics, Vol 27, p. 301–325.
Franks, J. and Mayer C. (1994). “The Ownership and Control of German
Corporations,” Manuscript, London Business School.
Gillan, S. L., and Starks L.T. (1998) “A Survey of Shareholder Activism: Motivation and Empirical Evidence,”
Contemporary Finance Digest . p, 2-34.
Gillan, S.L. and Starks, L.T (2003) "Institutional Investors, Corporate Ownership, and
Corporate Governance: Global Perspectives," Ownership and Governance of
Enterprises: Recent Innovative Developments, Laixiang Sun, Editor,
Palgrave/MacMillan.
Gillan, S. and Starks, L.T. (2007) Corporate governance, corporate ownership, and the role of institutional investors: A global perspective, Journal of Applied Finance, 13
(2) p. 4–22.
Hansen, G. S. & Hill, CWL. (1991). Are institutional investors myopic? A timeseries study of four technology-driven industries. Strategic Management Journal, Vol.12(1) p.1-17
Hawley, J. P and Williams, A. T (1997), The Emergence of Fiduciary Capitalism.
Corporate Governance, Vol. 5, No. 4

Hermalin, B. E. and Weisbach, M. S. (1991) The effects of board composition and direct incentives on firm performance. Financial Management , Vol.20, p. 101–112.
Hendry, J.: 2002, The principals other problems: Honest incompetence and management contracts”,
Academy of Management Review Vol . 27, p 98-113
Hodges, R., Macniven, L. and Mellett, H. (2004) Governance of UK NHS Trusts: the
Annual General Meeting. Corporate Governance: An International Review, Vol. 12, p. 343–352.
Holland, J. B. (1998). ‘Influence and intervention by financial institutions in their investee companies’, Corporate Governance, Vol. 6, p. 249–263.
Ibrahim, M. M. (2005) Performance evaluation of the mutual fund industry in Nigeria .
(www.ndic-ng.com/pdf/mfundperf2005q1.pdf)
[Accessed:15/05/2010] .
http://www.google.com/search?hl=en&rlz=1B3RNFA_enGB
278GB287&q=related:www.ndic-ng.com/pdf/mfundperf2005q1.pdf
Inyang, B. J. (2009) “Nurturing Corporate Governance System: The Emerging Trends in Nigeria. Journal of Business, Systems, Governance and Ethics , Vol.4 (2), p. 1-13
Ingley, C. B. and Van der Walt, N. T. (2004) Corporate Governance, Institutional
Investors and Conflicts of Interest. Corporate Governance: An International Review ,
Vol.12 (4), p. 534-551.
Jacoby, S. M. (2007) Principles and Agents: CalPERS and corporate governance in
Japan. Corporate Governance: An International Review , Vol.15, p. 5–15.
Jensen, M. C. (1993) The Modern Industrial Revolution, Exit, and the Failure of
Internal Control Systems. Journal of Finance , 48 (3), p. 831-80
Jensen, M. C. and Meckling, W. H. (1976) Theory of the Firm: Managerial Behavior,
Agency Costs and Ownership Structure. Journal of Financial Economics, 3 (4), p.
305-360
Judge, W. Q. Gaur, A. and Muller-Kahle, M. I. (2010) “Antecedents of Shareholder
Activism in Target Firms: Evidence from a Multi-Country Study”. Corporate
Governance: An International Review, Vol. 18 No.4, p. 258-273.
Kaplan, S. N. (2008) Are U.S. CEOs Overpaid?. Academy of Management
Perspectives, Vol.22 (2), p. 5-20.
Karpoff, J.M. (2001) The Impact of Shareholder Activism on Target Companies: A
Survey of Empirical Findings. For presentation at the Norwegian School of
Management.
KPMG (2008) Investment in Nigeria. 4 th
ed, Lagos. p1-108
La Porta, R., Lopez-de-Silanes, F., and Shleifer, A. (1999) Corporate ownership around the world. Journal of Finance, Vol.54. p. 471–517.

McCahery, J. A., Sautner, Z. and Starks, L. T. (2009) Behind the Scenes: The
Corporate Governance Preferences of Institutional Investors, ECGI, Working Paper
N°. 235/2009, (February).
Monks, R. A. G. (1996) The need for shareholder activism value added and legitimacy . [Available at: www.ragm.com/archpub/ragm/value_added.html
].
(Acessed:15/04/2010)
Monks, R. A. and N. Minow (1991). Power and Accountability. Dunmore, PA:
HarperCollins.
Nesbitt, S. L. (1994) Long-term rewards from shareholder activism: A study of the
CalPERS effect. Journal of Applied Corporate Finance, Vol. 6, p.75–80.
Ogbechie, C. and Koufopoulos, D. N. (2007) Corporate governance practices in publicly quoted companies in Nigeria . International Journal of Business Governance and Ethics , Vol. 3 (4). pp. 350-381.
Okike, E. N. M. (2007) Corporate Governance in Nigeria: the status quo. Corporate
Governance: An International Review , Vol.15 (2), p. 173-193
Okonjo-Iweala, N. and Osafo-Kwaako, P. (2007 ) Nigeria's Economic Reforms:
Progress and Challenges . Brookings Global Economy and Development Working
Paper No. 6. (March)
Opler, T.C. and Sokobin, J. (1997) Does coordinated institutional activism work? An analysis of the activities of the council of institutional investors. Ohio State University working paper.
Oyejide, T. A. and A. Soyibo (2001) Corporate Governance in Nigeria , Paper
Presented at the Conference on Corporate Governance, Accra, Ghana, (29–30
January)
Parrino, R., Sias, R. W., and Starks, L. T. (2003) Voting with their feet: Institutional ownership changes around forced CEO turnover. Journal of Financial Economics,
Vol. 68, p. 3–46.
Partnoy, F. S. and Thomas R. S. (2007) Gap Filling, Hedge Funds, and Financial
Innovation , Brookings-Nomura papers on financial services , Yasuki Fuchita, Robert
E. Litan, eds., Brookings Institution Press.
Pozen, R.C. (1994) Institutional investors: The reluctant activists. Harvard Business
Review . p. 140-149.
Prevost, A. K. and Rao, R, P (2000) Of what value are shareholder proposals sponsored by public pension funds? Journal of Business, Vol.
73, p 177-204.
Pound, J. (1988) Proxy contests and the efficiency of shareholder oversight, Journal of Financial Economics, 20, p. 237-265.

Ravina, E. and Sapienza, P. (2009) What Do Independent Directors Know? Evidence from Their Trading, forthcoming, Review of Financial Studies
Roe, M. J. (1994) Strong Managers, Weak Owners: The Political Roots of American
Corporate Finance, Princeton University Press, Princeton, NJ.
Romano, R. (2001) “Less is more: making institutional investor activism a valuable mechanism of corporate governance”, Yale Journal on Regulation, Vol.18, p. 174–
251.
Rwegasira, K. (2000) Corporate Governance in Emerging Capital Markets: Whither
Africa? Empirical Research-Based and Theory-Building Papers., Vol. 8 (3), (July), p.
258-268.
Ryan, L.V. and Schneider, M. (2002) “The antecedents of institutional investor activism”.
Academy of Management Review , Vol .
27 No.4, p. 554–573
Securities and Exchange Commission (2003) Code of Best Practices for Public
Companies Securities and Exchange Commission
Securities and Exchange Commission (2011) Code of Corporate Governance
Securities and Exchange Commission
Securities and Exchange Commission (2010) First Quarter magazine
Securities and Exchange Commission (2008) Fourth Quarter magazine
Seki, T. (2005) Legal reform and shareholder activism by institutional investors in
Japan. Corporate Governance: An International Review , Vol.13, p. 377–385.
Shleifer, A. and Robert Vishny, R. (1997) A Survey of Corporate Governance.
Journal of Finance , Vol.52 (2), p. 737–783.
Sikavica, K., Hillman, A. (2008) “Towards a Behavioral Theory of Corporate
Ownership and Shareholder Activism. Academy of Management Best Paper
Proceedings
Shotter, J., and Gergen, K. (1994) Social construction: knowledge, self, others, and continuing the conversation. In: Deetz, S. ed. Communication yearbook . 17, Newbury
Park: Sage.
Smith, M. P. (1996) Shareholder activism by institutional investors: Evidence from
CalPERS Journal of Finance, Vol.51 (1), p. 227–252
Stevenson, D (2008) Buy into Africa, Investors chronicles. 15th August
Stout, L.A. (2007) “The Mythical Benefit of Shareholder Control. Regulation”, Vol.
30, No. 1, p. 42-47

Strätling, R. (2003) General meetings: A dispensable tool for corporate governance of listed companies? Corporate Governance: An International Review , Vol. 11, p.74–82.
Strickland, D., Wiles, K.W. and Zenner, M. (1996) “A requiem for the USA: Is small shareholder monitoring effective?”.
Journal of Financial Economics, Vol.40, p. 319-
338.
Thisday (18 th November, 2002) AP: Shareholders Drop Directors, External Auditor
Tijjani, B., Fifield, S.G.M., Power, D.M. (2009) “The appraisal of equity investments by Nigerian investors”. Quantitative Research in Finance and Management , Vol.1 (1) p. 6-26.
Tosi, H.L., Werner, S., Katz, J.P., and Gomez-Mejia, L.R. (2000) How much does performance matter? A meta-analysis of CEO pay studies. Journal of Management ,
Vol.26, p. 301-339.
Turnbull, S. (1997) Corporate Governance: Its Scope, Concerns and Theories.
Corporate Governance: An International Review , 5 (4), (October), p. 180-181.
Uddin, S. and Choudhury, J. (2008) Rationality, traditionalism and the state of corporate governance mechanisms: illustrations from a less developed country.
Accounting, Auditing and Accountability Journal , 21 (7), p. 1026-105.
Useem, M. (1993) Executive defence: shareholder power and executive reorganization . Cambridge, MA: Harvard University Press.
Vanguard (2011) Foreign portfolio hits N381.34bn – NSE Online] [Accessed 17 th
February 2011] Available From World Wide http://www.vanguardngr.com/2011/01/foreign-portfolio-hits-n381-34bn-nse/
Web:
Wahal, S. (1996). ‘Pension fund activism and firm performance’, Journal of Financial and Quantitative Analysis, Vol. 31, p.1–23.
Wahal, S., Wiles, K. W. and Zenner, M. (1995) Who opts out of state antitakeover protection?: The case of Pennsylvania's SB 1310. Financial Management, Vol. 24, p.
22-39.
Xi, C. (2006) Institutional Shareholder Activism in China: Law and Practice.
International Company and Commercial Law Review. Sweet and Maxwell Limited.
London
Yakasai, A.G. (2001), "Corporate governance in a third world country with particular reference to Nigeria", Corporate Governance, Vol. 9 (3), p.238-53.
Young, M., Peng, M. W., Ahlstrom, D., Bruton, G. D., & Jiang, Y. 2008. Corporate governance in emerging economies: A review of the principal-principal perspective.
Journal of Management Studies,Vol. 45, p196–220.

Table 1 Equities market capitalisation and All-share index
Year Equities
Capitalisation
Market All-Share
(1984 = 100)
Index Number of Listed
Companies on the
1999
2000
(Billion Naira)
294.47
466.06
(Points)
5,266.4
8,111.0
NSE
268
272
2001
2002
2003
2004
648.84
748.73
1,325.60
1,926.40
10,963.0
12,137.7
20,128.9
23,844.5
261
258
265
277
2005
2006
2,524.76
4,228.57
24,085.8
33,189.3
288
288
2007
2008
10,301.00
6,987.49
Source: www.sec.com
57,990.2
31,450.8
310
301
Table 2 New Issues
Year State/Local
Government
Corporate
Bonds
Total Debt Total
Equities/Preferenc
Overall New
Issues
N’B
Bond
US$’
B
N’B US$’
B
N’B US$’
B
1999 0.03 0.0002 0.20 0.0015 0.23 0.0017
2000
2001
2003
2005
2006
2007
4.50
0.00
2002 20.00
0.00
2004 11.50
0.00
3.50
0.00
0.03 7.00
0.00
0.15 5.50
0.00
0.00
4.52
0.65
0.00 6.94
0.03 13.50
0.00
0.05 11.50
0.03
0.04 25.50
0.005
0.05
4.52
0.65
6.94
0.10 17.00
0.00 0.00
0.08
0.03
0.19
0.005
0.09 0.20 0.0015 11.70 0.0915
0.05
0.13
N’B e Share
11.80
5.71
32.68
41.28
29.43
183.72
405.84
278.64
0.00 1,338.58
US$’B N’B
0.09
0.04
0.25
0.32
0.23
1.41
3.10
2.13
10.24
12.03
16.71
37.20
66.78
30.08
195.42
412.78
295.64
1,338.5
US$’
B
0.09
0.13
0.28
0.51
0.23
1.49
3.16
2.26
10.24
2008 50.00 0.38 5.17 0.04 55.17 0.42 939.06
8
7.18 994.23 7.60
Note: US$ 1 = N130.75
Source: Securities and Exchange Commission Nigeria

Table 3 Twenty most traded stocks by value for the fourth quarter of 2008
S/N Equities Deals
Volume
(unit of shares) Value (Naira)
1 First Bank Of Nig Plc
2 Spring Bank Plc
65,024 562,138,580 12,968,070,243.89
6,027 2,235,161,938 12,494,555,233.42
3
4
United Bank for Africa Plc
Access Bank Nig. Plc
29,208 673,117,143 11,253,955,637.48
15,976 1,272,314,608 10,515,378,553.03
25,419 593,666,089 9,053,946,038.86 5 GT Bank Plc
First City Monument Bank
6 Plc 7,566,394,312.50
7 Platinumhabib Bank Plc
6,331 1,272,989,724
17,458 606,483,127 7,003,913,395.85
8
9
10
Oceanic Bank Int'l Plc
Zenith Bank Plc
Union Bank Nig Plc
11 Dangote Sugar PLC
12 Diamond Bank Plc
13 Nigerian Breweries Plc
14 Fidelity Bank Plc
15
Universal Insurance
Company Plc
16 Chams Plc
17 Skye Bank Plc
22,666 505,088,267
14,593 234,265,785
14,554 205,235,113
11,294
4,746
6,074
8,265
271,825,386
425,740,151
95,202,745
614,012,855
3,404 1,318,578,458
4,101 1,106,479,475
6,041 264,501,705
6,891,404,655.95
5,708,046,331.83
4,627,457,223.43
4,555,882,960.14
3,479,393,549.71
3,463,382,744.15
3,124,539,004.84
2,737,216,166.66
2,626,630,692.13
2,325,979,855.71
18 Fin Bank Plc
19 UACN Plc
2,463
2,286
409,493,959
59,655,744
20 Intercontinental Bank Plc 8,864 137,762,184
2,032,327,387.23
1,965,905,831.92
1,937,800,435.29
Total 274,794 12,863,713,036 116,332,180,254.02
Source: Compiled from reports supplied by The NSE
Table 4 ARM pension’s structure of investment portfolio-7days
FGN Securities
(Tbills &
16 Jul-
08
15 Jul-
08
14 Jul-
08
13 Jul-
08
12 Jul-
08
11 Jul-
08
10 Jul-
08
42.05% 42.21% 42.20% 42.09% 42.09% 42.09% 42.29%
Bonds)
Money Market 35.38% 35.70% 35.87% 36.04% 36.04% 36.04% 35.84%
Quoted Shares 22.10% 21.63% 21.47% 21.41% 21.41% 21.42% 21.41%
Mutual Fund 0.47% 0.47% 0.46% 0.46% 0.46% 0.46% 0.46%
Total 100% 100% 100% 100% 100% 100% 100%
Source: ARM prospectus (2008)