The effect of socially activist investment policies on the financial markets: Evidence from the South African boycott

We study the most important legislative and shareholder boycott to date, th e boycott of South Africa's apartheid regime, and find that corporate invol vement with South Africa was so small that the announcement of legislative/ shareholder pressure or voluntary corporate divestment from South Africa ha d little discernible effect either on the valuation of banks and corporatio ns with South African operations or on the South African financial markets. There is weak evidence that institutional shareholdings increased when cor porations divested. In sum, despite the publicity of the boycott and the mu ltitude of divesting companies, political pressure had Little visible effec t on the financial markets.