More than half of Korean companies regard activist funds as a threat to management activity, a survey showed Thursday.

According to a survey conducted by Maeil Business Newspaper, Korea Listed Companies Association and Kosdaq Listed Companies Association of 123 listed companies, 62 said they see activist investor attacks as a “threat.” Only 28 percent, or 35 companies, said they pose no threat to management. More than 60 percent of the companies also said the request by the activist funds to increase dividends is excess.

Fifty companies had a negative perception on activist funds’ overall activities, outnumbering 34 companies that have positive views. The survey, however, showed that 49 companies believe actions taken by these funds will contribute to improving corporate management structure versus 39 companies that said they will not bring much change.

The survey showed that the companies understand the positive role of an activist fund but are concerned that it can be a threat to their management. Only 14 percent of the companies surveyed said that they are equipped with a system that responds to the moves made by activist funds.



The survey was conducted at a time when activist funds have upped their voices in corporate management. Their proposals are expected to be put to vote at many shareholders meetings next week, including those at KT&G Corp. and JB Financial Group.

Activist funds, in particular, target corporate governance.

According to global voting right research agency Insightia, 32 Korean companies have been targeted by activist funds in January and February, up from 8 companies for the full year in 2019.

Rebecca Sherratt, a publications editor at Insightia, noted that activist fund activity has enhanced in Korea amid more attention given to environment, social, governance such as corporate management structure.

Some experts, in the meantime, warn that greenmailing, or the action of buying enough shares in a company to challenge leadership, can be prevalent.

“It is now the time when market participants - companies and investors - carry out efforts so that the activities of activist funds become the interests of all,” said Hyoung-goo Kang, an assistant professor at Hanyang University.

By Won Ho-sup, Kang Bong-jin, and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]