Shareholder activism as a corporate governance monitoring mechanism in Malaysia: A conceptual review

Abstract

This paper examines shareholder activism as a corporate governance monitoring mechanism in Malaysia, where concentrated ownership and family-controlled firms pose unique agency challenges. Drawing on a conceptual and narrative literature review, the study synthesizes theoretical foundations, regulatory frameworks, and institutional practices to develop a Malaysian-centric framework. The framework links shareholder dissatisfaction, agency problems, and investing relationships to shareholder activism outcomes. Findings suggest that activism in Malaysia primarily functions through voice mechanisms—such as resolutions, voting, and board engagement—rather than exit strategies, due to the limited takeover market and collectivist cultural norms. Institutions such as the Minority Shareholder Watchdog Group (MSWG) play a pivotal role in amplifying minority shareholder voices, while effective investor relations strengthen trust, reduce information asymmetry, and enhance the success of activism initiatives. The study concludes that shareholder activism is an emerging but essential complementary governance tool that strengthens transparency, accountability, and firm performance when internal governance mechanisms are weak. The paper contributes to the limited literature on activism in emerging markets by offering a conceptual framework tailored to Malaysia’s institutional and cultural context, and provides insights for regulators, boards, and investors to foster structured shareholder engagement.