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Accounting Forum xxx (2014) xxx–xxx

Contents lists available at ScienceDirect

Accounting Forum

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ccounting for rituals and ritualization: The case ofhareholders’ associations

hinyere O. Uchea,∗, Jill F. Atkinsb

University of Bristol Department of Accounting & Finance, 8 Woodland Road, BS8 1TN Bristol, UKUniversity of Reading Department of Business Informatics, Systems and Accounting, 517 Engine House, Henley Business School,reenlands Henley-on-Thames, Oxfordshire, RG9 3AU, UK

r t i c l e i n f o

rticle history:eceived 19 July 2014eceived in revised form 20 October 2014ccepted 26 October 2014vailable online xxx

eywords:itualsigeriarivate investor meetingsGMsourtshareholders’ associations

a b s t r a c t

This paper uses ritual theory to examine the participation of shareholders’ associationsin rituals and ritualization within social spaces. We focus on how the interconnectednessbetween private rituals (private investor meetings) and public rituals (AGMs and courts)produce psychological and functional benefits for shareholders’ associations. We explorethe strategic acts used by shareholders’ associations in ritualization. Our study reveals thatthe participation of shareholders’ associations in each ritual plays a significant role in reduc-ing conflict and maintaining harmony. Regarding ritualization, our study shows that someshareholders’ associations use a form of gamesmanship to gain strategic advantage in auditcommittee nominations at AGMs.

© 2014 Elsevier Ltd. All rights reserved.

. Introduction

This study uses ritual theory to explore shareholders’ association members’ accounts of how rituals and ritualizationre used in the pursuit of their agenda within social spaces. In this paper, we describe rituals as “rule-governed activitieshat draws the attention of its participants to objects of thought and feeling which they hold to be of special significance”Lukes, 1975, p.291).1 Rituals are routine actions that are performed in social spaces and can be described as formalized,rdered, stylized, scripted, stage-managed, and involving role play during performance (Goodsell, 1989; McComas, Besley,

Black, 2010; Smith & Stewart, 2011). Studies suggest that rituals offer both psychological and functional benefits toarticipants and their audience. From a psychological perspective, rituals help create harmony and shared meanings betweenarticipants (Lewin & Green, 2009; Rook, 1985). From a functionalist perspective, rituals aid social order, communicationnd identity creation (Lewin & Green, 2009; Smith & Stewart, 2011). In the accounting field, studies suggest rituals areseful in communicating accounting numbers to an audience. They suggest that rituals foster accountability and discipline

Please cite this article in press as: Uche, C. O., & Atkins, J.F. Accounting for rituals and ritualization: The case of shareholders’associations. Accounting Forum (2014), http://dx.doi.org/10.1016/j.accfor.2014.10.006

nd mask conflict in the audit profession (Catasús & Johed, 2007; Gambling, 1977, 1987; Mills & Bettner, 1992; Roberts,anderson, Barker, & Hendry, 2006; Pentland, 1993; Power, 2003). A few of these studies draw insights from the directbservation of participant interactions in specific spaces, such as private spaces (e.g., investor meetings) and public spaces

∗ Corresponding author.E-mail addresses: [email protected] (C.O. Uche), [email protected] (J.F. Atkins).

1 This definition of rituals represents one of several explanations found in ritual studies. The fragmented literature on rituals suggests there is no consensusn the meaning of rituals (Dacin et al., 2010; McComas et al., 2010).

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2 C.O. Uche, J.F. Atkins / Accounting Forum xxx (2014) xxx–xxx

(e.g., annual general meetings-AGMs) (Apostolides, 2007; Catasús & Johed, 2007; Roberts et al., 2006; Solomon, Solomon,Joseph, & Norton, 2013).

However, these studies do not provide insight into the functional and psychological benefits attributed to actor par-ticipation in multiple rituals involving several interconnected yet differentiated spaces, despite overwhelming evidencethat indicates that the nature and function of rituals differ across private and public spaces (Dacin, Munir, & Tracey, 2010;Goodsell, 1989; Johnson, Schnatterly, Johnson, & Chiu, 2010). Thus, we do not know the potential value attributable toactor participation in several loosely connected rituals. Therefore, our first objective is to address this problem throughour research question: how does the interconnectedness between private rituals (private investor meetings) and publicrituals (AGMs and courts) produce psychological and functional benefits for shareholders’ associations? We focus on theparticipation of shareholders’ associations in multiple rituals. We select shareholders’ associations rather than institutionalinvestors because of the former’s preference for participation in rituals across a multitude of spaces. Studies suggest thatshareholders’ associations, organizations consisting mainly of small, ordinary shareholders, pursue governance accountabil-ity through three rituals: private investor meetings, annual general meetings (AGMs) and courts. However, the participationof shareholders’ associations in the courts’ rituals remains relatively underexplored in prior studies. Therefore, we alsoaim to address this gap through our studied rituals (Catasús & Johed, 2007; Choi & Cho, 2003; Strickland, Wiles, & Zenner,1996).

In this study, rituals are considered products of a process termed ritualization (Kelner, 2008). Ritualization is a term thatis associated with a strategic way of acting in the practice of rituals (Bell, 1992; McComas et al., 2010). In the accountingliterature, ritualization is rarely examined despite its relevance to the performance of rituals (Catasús & Johed, 2007; Uddin& Choudhury, 2008; Roberts et al., 2006). Ritualization has also been examined by research scholars outside the accountingliterature. These scholars provide insight into how participants use strategic practices in the enactment of rituals (Kelner,2008; Knottnerus & LoConto, 2003; McComas et al., 2010). However, what these studies do not address are the strategicacts used by groups in ritualization. What strategic acts do participants in groups (e.g., shareholders’ associations) use inritualization? Therefore, our second research objective focuses on ritualization, where we explore the strategic acts of groupsparticipating in ritualization. Our aim is to understand the strategies and tactics employed by shareholders’ associations inritual practices to produce a desired outcome. In this paper, we explore the ritualization of AGMs, which represent the mainsocial space used by shareholders’ associations for shareholder activism2 (Catasús & Johed, 2007; Hasenfuss, 2006). AGMsare preferred over private investor meetings and courts because they offer greater freedom for participants to engage instrategic and psychological games. The differences in the extent of ritualization between each social space are determinedby the degree of formality, opportunities for manipulation and planning (Apostolides, 2007; Johnson et al., 2010; McComaset al., 2010; Smith & Stewart, 2011). For example, the ‘question time slot’ at AGMs is far less “predictable and controllable”(Apostolides 2007, p. 1279). Catasús and Johed (2007) find evidence of shareholders’ association members strategicallymanipulating the question time slot to embarrass management.

Our theoretical frame is based on ritual theory. Our choice of theories differs from prior works that have employedagency theory, the dramaturgical, institutional logic and ideal speech situations as well as actor network theory in study-ing shareholders’ associations and AGMs (Apostolides, 2007; Biehl-Missal, 2011; Carrington & Johed, 2007; Catasús andJohed, 2007). These studies form part of a growing body of literature that provides evidence of ritual performance at AGMs.These studies demonstrate that rituals are used in communicating corporate performance to shareholders in regulatedspaces. However, the application of these theoretical frameworks causes our attention to be directed toward symbols,aesthetics and performance styles rather than the real effects of rituals on participants that go beyond symbolic mean-ings (Johnson et al., 2010; McComas et al., 2010). Johnson et al. (2010, p. 1591) argue that for researchers examiningrituals without applying ritual theory, “ritual implies a lack of significance: being ritualized is equated with having lit-tle impact or influence”. The authors argue that ritual theory helps explain the substantive value of rituals. Anotheridentifiable limitation is that these theories do not provide insight into shareholders’ cognitive interpretations of eventswhen assessing ritual performance at AGMs. In contrast, ritual theory focuses on the meanings and messages associatedwith actions that are transmitted between participants during rituals (Lewin & Green, 2009; Tellis-Nayak & Tellis-Nayak,1984).

Our study uses the context of Nigeria, where shareholders’ associations have faced criticism because of their attendanceat private meetings with corporate managers and their use of scripted performances at AGMs (Adegbite, Amaeshi, & Amao,2012; Amao & Amaeshi, 2008; Yakasai, 2001). Second, this setting provides an opportunity to explore the strategic acts ofgroups participating in ritualization at AGMs. We focus on audit committee elections at AGMs. In Nigeria, a shareholders’association can nominate a member who holds a stake in a target company as a shareholder representative on the auditcommittee. However, there are over thirty shareholders’ associations in Nigeria (Amao & Amaeshi, 2008; Tijjani, Fifield,


& Power, 2009). This large number makes the election process for positions within an audit committee competitive. Thiscompetitive environment provides an opportune setting for examining group strategizing behavior. This situation of a highnumber of registered shareholders’ associations in Nigeria is in contrast to that of Australia, New Zealand, Sweden, South

2 In this paper, we define shareholder activism as an activity that is built on institutionally defined systems that enable participating actors such asshareholders’ associations to convey messages through symbolic performances and ceremonies that hold financial and social meanings in legally prescribedspaces (Judge et al., 2010; Poulsen et al., 2010).


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frica, and the UK, where there is one main shareholders’ association (Amao & Amaeshi, 2008; ASA annual report 2010;ailey, 2005; Carrington & Johed, 2007; Manry & Stangeland, 2003; Morrall, 2011; Tijjani et al., 2009). Therefore, strategizingcts among groups for audit committee roles is difficult to explore in these countries.

Based on our analysis, we make the following contributions. First, our study reveals how the connection among privatenvestor meetings, AGMs and courts is substantively beneficial to shareholders’ associations. The participation of sharehol-ers’ associations in each ritual plays a significant role in reducing conflict and maintaining harmony. We find that socialrder, harmony, and conformance to scripts at AGMs are dependent on the resolution of disagreements at private investoreetings. Furthermore, the participation of shareholders’ associations in court rituals is evidence of unresolved conflicts atGMs. Second, our study shows that gamesmanship is a vital element of strategic ritualization, particularly for elections

nto an audit committee at AGMs. In our context, gamesmanship is defined as a game of numbers. Our study shows thatome shareholders’ associations use a form of gamesmanship to gain strategic advantage in audit committee nominationst AGMs. Third, in contrast to prior studies that suggest that rituals harmonize groups through similar or different sharedeanings, our study suggests that rituals are capable of creating (dis)harmony between groups. This is exemplified in the

ompetition for audit committee roles and confrontations at AGMs. Finally, our study of ritualization extends the work ofambling (1987) on accounting for ritual. The findings are discussed in the current paper, which is divided into five sections.he next section discusses the theoretical literature. The third and fourth sections examine the settings and methodology.he fifth and sixth sections cover the empirical evidence and offer concluding remarks.

. The theory of rituals: rituals, the benefits of rituals and ritualization

.1. Rituals: private investor meetings, AGMs and courts

The theoretical domain of ritual theory has benefited from the early works of several authors. These authors have typ-cally explored the behaviors of actors during rituals (Bell, 1992; Durkheim, 1912; Goffman, 1963, 1967; Kertzer, 1988;nuf, 1993; Turner, 1969). This has set the foundation for research work on the behavior of different actors engaged

n ritual practices. These authors have attempted to understand the interaction between management and shareholderst AGMs and private investor meetings (Biehl-Missal, 2011; Carrington & Johed, 2007; Catasús & Johed, 2007; Robertst al., 2006). However, this research has yet to be extended to the study of courts, as mentioned earlier. In this paper,e focus on private investor meetings, AGMs and courts as important rituals for shareholders’ associations in shareholder

ctivism.Prior studies indicate that shareholders’ associations attend private investor meetings with corporate managers (Poulsen,

trand, & Thomsen, 2010; Strickland et al., 1996). However, a study by Roberts et al. (2006) illustrates the ritual nature ofrivate investor meetings. They provide evidence suggesting that private investor meetings act as a setting for ritual prac-ices for institutional investors. That the authors explore investor meetings as a private ritual demonstrates that corporateresentations are scripted performances. Responses to preemptive investor questions are prepared in advance with privatereparations led by the top management team within the companies. Members are expected to play an active role in theroceedings and to communicate in a distinctive language. The language used in private investor meetings contrasts withhat of AGMs, where the language of communication is intentionally made accessible to those present, including passivearticipants. Goodsell (1989, p. 161) refers to the language used in private organizational rituals as specialized language aspposed to the lay language used in public rituals. Private investor meetings are supported by AGMs (Roberts et al., 2006;tratling, 2003).

An AGM is a legal corporate governance activity that provides an opportunity for directors to communication withhareholders, pass resolutions and demonstrate accountability (Apostolides, 2007; Stratling, 2003). This annual ritual routines used to seek shareholders’ consent on corporate agendas through discussions and votes on management’s or shareholders’roposals (Ajogwu, 2007; Hill, 2010; Uddin & Choudhury, 2008). AGMs have involved scripted performances (Apostolides,007; Biehl-Missal, 2011; Catasús & Johed, 2007). Familiar scenes include chief executives and directors following writtencripts in their addresses to shareholders. These scripted performances are supposed to help translate the experiences ofhe participants to an audience in an orderly manner (Goodsell, 1989; Rook, 1985). The use of scripts by shareholders’ssociations has been documented in the literature (Biehl-Missal, 2011; Catasús & Johed, 2007).

Courts, similar to the other two rituals, are relevant to the activities of shareholders’ associations. The literature suggestshat courts serve as a mediator in resolving conflict between shareholders’ associations and management (Black, 1998; Choi

Cho, 2003). Activist groups use court litigations as part of their ritual routines (Strickland et al., 1996). For example, theisbanded United Shareholders’ Association in the USA and the People’s Solidarity for Participatory Democracy (PSPD) inouth Korea have filed cases in court against corporate managers (Choi & Cho, 2003). In this paper, we follow prior literatureutside of accounting that considers courts as a form of ritual (Garfinkel, 1956; Harris, Evans, & Beckett, 2011; Tait, 2001).


ence, we include courts in our categorization of rituals. Courts as public rituals exhibit ritual properties. Courts follow anrdered routine. Formalized routines are employed to achieve a specific objective (Feldman & Pentland, 2003; Goss, Robert,ichela, & James, 2011). For example, judges follow an ordered process of reviewing prior cases and rules as part of a formal

outine aimed at delivering a fair judgment. Courts employ scripts and labels in executing judgment. The labels are used toag a party as ‘innocent’ or ‘guilty’ through a scripted performance.


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2.2. The benefits of rituals: theory and practice

In examining the benefits of rituals, we pay attention to four elements that have been drawn from a synthesis of ritualstudies (Goodsell, 1989; Lewin & Green, 2009; McComas et al., 2010; Smith & Stewart, 2011). These benefits include (a)social order, (b) shared meaning through symbols, (c) role play and (d) harmony. Regarding social order, it has been arguedthat rituals contribute to the maintenance of social order through scripted performances (Apostolides, 2007; Roberts et al.,2006). Social order is meant to foster control and group cohesion. Participants are subjected to a social order that aimsto prevent conflicts (Gambling, 1987; McComas et al., 2010; Seligman, 2009). Conflicts and dysfunctional relations mightbrew between the different constituencies; however, the rigid structures and artful practices help minimize conflict anddisruptions (Apostolides, 2007; Lewin & Green, 2009). For instance, at AGMs, social order is sustained and control establishedover shareholder voting through a show of hands or the use of handsets. Such ceremonies deemphasize spontaneity bymonitoring actions to ensure they follow a prepared script.

Another identifiable benefit of ritual is that it plays a central role in the construction of social reality through sharedmeanings. Rituals have been found to produce shared meaning through symbols (Dacin et al., 2010; Gambling, 1987). Asymbol is a “representation embedded with meaning beyond the overt, emerging from a shared convention” (Smith &Stewart, 2011, p.117). Symbols provide a form of representation that gives significance to an artefact (Gambling, 1987;Smith & Stewart, 2011). Artefacts are objects that generate symbolic meaning, such as locations (i.e., investor meetings),language, participants, votes, shareholder proposals and performance reports (Gambling, 1987). Gambling (1987) argues thatthe belief that a symbol is representative of the ‘worth’ it is meant to convey makes the use of symbols in practice popular.For example, a location can give additional meaning to the ritual (Dacin et al., 2010; Kertzer, 1988). An announcement ofan AGM location symbolizes that the management is willing to give an account to shareholders of its past performance.Courts can be considered as symbolizing discipline or a form of degradation (Garfinkel, 1956; Harris et al., 2011; Tait,2001).

In rituals, actors take on different roles that are considered meaningful to the participants. The roles played by actors areobserved in the seating arrangements of actors and the ritual performance. For example, in court, the seating arrangement isordered in such a manner that the seating positions represent the roles played by those present. The seating arrangementshelp separate the audience from the defense as well as the plaintiff. In ritual performance, actors consciously play rolesthat are intended to reflect a particular social identity (Goodsell, 1989). According to Dacin et al., (2010, p.1396), “throughparticipants’ enactment of particular roles, the meaning embodied in the performance is expressed and experienced morevividly”. However, the meaning is only shared when the participants appreciate the content of the performance. Only thenare the actors able to interpret the behaviors of other participants.

Ritual theorists believe that participants in rituals are cast into roles that bring about either a harmonious or a competitiverelationship among group members (Catasús & Johed, 2007; Lewin & Green, 2009). Rituals unite the performers and theaudience, all from different constituencies, into a homogeneous group sharing the same meaning and value. However, whenparticipants hold separate social identities, different constituencies participating in similar rituals subscribe to differentsets of meanings. The differences in their interpretation of the meaning of the rituals obstruct their ability to engage in aharmonious relationship (Lewin & Green, 2009). In addition, constituencies are able to compete and attach different meaningsto the rituals (Baumann, 1992; Lewin & Green, 2009).

We apply these elements as our theoretical framework in our evaluation of the benefits of rituals to shareholders’ asso-ciations. In the accounting literature, few studies explore the benefits of private investor meetings and AGMs (Apostolides,2007; Barker, Hendry, Roberts, & Sanderson, 2012; Catasús & Johed, 2007; Roberts et al., 2006; Stratling, 2003). While thereis a vast amount of research on these two rituals, there is virtually no study that explicitly examines the value of courtsas a form of ritual to a range of investor groups. A review of research studies indicates that scholars have explored thecontent of and process associated with investor relations meetings (Marston, 1996, 2008; Holland & Doran, 1998). However,only Roberts et al. (2006) investigate the value of private investor meetings as a ritual. Roberts et al. (2006) indicate thatprivate investor meetings provide a fertile context for management to communicate shareholder value through rehearsedperformance. Such meetings provide disciplinary appeal to fund managers. In contrast, Strickland et al. (1996) show thatshareholders’ associations use private investor meetings for negotiations with corporate managers.

The benefits of AGMs have been debated by researchers. Research studies show that shareholders’ participation in AGMsprovides them an opportunity to hold management to account through face-to-face encounters (Apostolides, 2007; Catasus& Johed, 2012; Jeacle, 2008). Shareholders are able to ask corporate managers probing questions without fear of exploita-tion or restraint (Carrington & Johed, 2007). Additionally, open confrontation could act as a deterrent to management’sengagement in unacceptable governance practices, such as excessive executive remuneration (Poulsen et al., 2010). How-ever, other researchers argue that a soft discipline effect is an insufficient mechanism for curbing poor corporate governancepractices. They suggest that there is minimal value-relevant information at AGMs compared with private investor meetings.Management presentations are viewed as indexical1 to ideal speech. It is argued that a rehearsed sequence of events atAGMs constrains open dialogue between shareholders and corporate managers (Barker, 1998; Catasús & Johed, 2007; Olibe,


2002; Solomon, Solomon, Joseph, & Norton, 2000; Stratling, 2003). Grundfest (1993, p. 873) refers to AGMs as empty ritu-als, as illustrated in “cases of board members and executives returned to office through uncontested shareholder election”.Essentially, researchers suggest that AGMs remain a symbolic ritual carried out in fulfillment of a regulatory requirementconcerning governance activities (Apostolides, 2007; Grundfest, 1993; Solomon et al., 2000).


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Research studies show that regulations on the non-binding nature of shareholder proposals have played a role in makingGMs resemble symbolic rituals (Black, 1998; Carlsson, 2007; Cziraki, Renneboog, & Szilagyi, 2010; Seki, 2005). The literature

ndicates that the outcome of voting remains unaffected by the physical presence of shareholders at AGMs. This is becausearge investors prefer to use proxy voting rather than turning up at the AGM. The general view is that a preference forroxy voting makes the AGM ritual meaningless (Jeacle, 2008; Manifest, 2008; Solomon et al., 2000). Therefore, in theast, institutional regulators such as the British Department of Trade and Industry (DTI) have questioned the efficacy ofolding an AGM in a consultation process (DTI, 1999). Scholars examining less developed countries in Africa, includingenya and Nigeria, draw similar conclusions, despite reports of higher attendance at some AGMs (Ajogwu, 2007; Hasenfuss,006; Musikali, 2008; Yakasai, 2001). In Kenya, large shareholder turnouts have been interpreted as evidence of greaterhareholder awareness. However, the cost implications have led to suggestions of the need for alternative communicationechanisms (Irungu, 2008; Musikali, 2008). These arguments reiterate the need to revisit the benefits of AGMs along with

he two rituals.

.3. Ritualization

Ritualization concerns activities that are carried out in “in deliberate, purposive, and calculating manner” in the perfor-ance of rituals (Knottnerus & LoConto, 2003, p.430). Roberts et al. (2006) hint at the fact that private investor meetings are

itualized. The authors uncover evidence of deliberations and calculative behavior in management’s preparation for encoun-ers with fund managers. Beyond private investor meetings, scholars implicitly suggest that ritualization is observable atGMs (Bates & Hennessy, 2010; Catasús & Johed, 2007). Ritualization is achieved when actors strategically manipulate rituals

hrough rites and staged performance involving gamesmanship at AGMs.Smith and Stewart (2011, p.114) describe rites as a “singular and specific instance of a ritual”. An example of a rite includes

ominations to boards and audit committees at AGMs. These rites offer an opportunity for shareholder participation and thenvocation of power through voting (Choi & Cho, 2003; Siehl, Bowen, & Pearson, 1991). The end result is usually a change inndividual identity (Goodsell, 1989; Rook, 1985; Smith & Stewart, 2011). This change is witnessed in the “status positions

ithin a social structure” (Rook, 1985, p. 282). For example, a participant can be transformed after the board nomination into non-executive director. Rites can cause a shift in social power between two groups. For example, Bates and Hennessy (2010)ocument that activists’ shareholders’ associations in Canada use the power of dissident proxy initiatives at public meetingso pressure management into negotiations. These shareholders are transformed into socially powerful actors through thealculative manner in which they deploy their votes in performance of the voting rites on proposals. Rites include stagederformances (Goodsell, 1989).

Staged performances are observed in the behaviors of participants who deliver their lines in calculative ways that “amounto stage gaming” (Goodsell, 1989, p.161). Basically, stage gaming, also known as gamesmanship, is a part of staged perfor-

ance. Gamesmanship refers to a variety of planned tactics used by participants in a ritual for dealing with opponents. Gamesre observed in rituals (Gambling, 1987; Solomon et al., 2013; Tellis-Nayak & Tellis-Nayak, 1984). Gamesmanship involvesn elaborate plan aimed at managing social interactions between participants in a ritual (Tellis-Nayak & Tellis-Nayak, 1984).he process and reward system of a ritual activity can encourage or discourage participants from playing games (Bart, 1989;acdonald & Kam, 2007). For example, in academia, authors employ various tactics to publish in top journals. This is because

uthors are primarily rewarded for where rather than what they publish. Additionally, shareholders’ associations employactics reflective of gamesmanship. They stage-manage their behavior to attract attention to their protestation. They adoptublicity stunts and theatrical performances to give visibility to their agenda (Biehl-Missal, 2011; Hasenfuss, 2006). The

iterature hints that shareholders’ associations in Nigeria indulge in game playing, although we have minimal insight intoow this is done (Yakasai, 2001).

. The setting

As mentioned earlier, our context is set in Nigeria. This West African country had a nominal GDP of 9.1 million in the firstuarter of 2012, representing a growth in real GDP of over 6.17% (Emejo, 2012). It is one of the most buoyant economies infrica. The economic development of the country has benefited to a large extent from the growth of the capital market from5.5 billion in 1985 to 7.9 trillion in 2010 (Nigerian Stock Exchange website, 2012). Over the last 40 years, the government

as promoted a largely fragmented shareholding structure among 301 listed companies with few core investors (Amao &maeshi, 2008; Otaniyi & Makina, 2010). The federal government facilitated the establishment of several shareholders’ssociations in Nigeria to protect the interests of small shareholders. The main agenda of shareholders’ associations inigeria is to promote the rights and interests of small shareholders, especially their members (Amao & Amaeshi, 2008;kike, 2007). Shareholders’ associations are able to represent the interests of their members by participating in governancectivities. According to the Company Law of Nigeria (CAMA, 1990), shareholders can be voted into board and audit committeeoles. The law required that three of the six audit committee roles be allocated to shareholders. Traditionally, shareholders’


ssociations tend to vote their members into such roles at AGMs (Ajogwu, 2007; Okike, 2007; Oluwanuga, 2005).Since their initial establishment, there has been a documented increase in the number of newly registered shareholders’

ssociations in Nigeria. There are now at least thirty shareholders’ associations in Nigeria. This numerical size is in significantontrast to other countries that boast only one shareholders’ association (Amao & Amaeshi, 2008; Okike, 2007; Oluwanuga,


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Table 1Face-to face interviewees’ details.

Serial nos Interviewee’s position No of respondents

1 National Secretary for the Zones 12 Chairman 23 Secretary General 24 Member/Founder 15 Member 26 Former Publicity Secretary/founding member 17 Assist Gen Secretary 18 National Coordinator 29 Ex-Official-Member 210 Former Vice-Chairman 211 Coordinator 112 Former Secretary and member 113 Founder-Individual Activist 114 Secretary 1

Code Interviewee’s position Years of membership

1 Member 22 Lagos Coordinator 103 Personal Assistant to National Coordinator 54 Youth Coordinator 35 Ex-Officio/member 7
6 Treasurer 107 Member 11
2005). There are no official data available to compare the membership strength of shareholders’ associations in Nigeria tothat of the dissolved United Shareholders’ Association in the USA, the Swedish Shareholders Associations or the AustralianShareholders’ Association. However, based on the interviews and observations, we believe the membership strength ofshareholders’ associations in Nigeria is as high as 100 per group. This suggests that the shareholders’ associations in Nigeriamay have fewer members than the 65,000 and 7135 recorded in Sweden and Australia, respectively. This, by implication,means that the use of strategic practices where feasible is crucial to the shareholders’ associations in Nigeria to compensatefor their lower membership numbers (ASA annual report 2010; Carrington & Johed, 2007).

The activities of shareholders’ associations are publicly observable at AGMs and in courts, although little is known abouttheir participation in private investor meetings (Amao & Amaeshi, 2008; Okike, 2007). In their engagement in these twopublic rituals, the shareholders’ associations in Nigeria can be clearly differentiated using participation levels and promi-nence. For example, active shareholders’ associations, such as the Nigerian Shareholders Solidarity Association (NSSA) andthe Independent Shareholders’ Association of Nigeria (ISAN) from the western part of the country, have dominated thegovernance arena and gained more media exposure compared with other large but passive groups, such as the Lagos share-holders’ association (in the West) and the Port Harcourt shareholders’ association (in the South). Conversely, there areconsiderably fewer shareholders’ associations that participate in yearly AGMs but have yet to gain prominence. The Inde-pendent Shareholders’ Association of Nigeria (ISAN) and the Progressive Shareholders’ Association of Nigeria (PSAN) havefiled cases against corporations and the regulatory bodies. Some court cases can be traced to challenges posed at AGMsby prominent shareholders’ associations (Aderinokun, 2003; Oyetade, Adeleye, & Adewakun, 2008). They have challengedpoor financial reporting, fraudulent sales of corporate properties, nomination of boards in underperforming companies andmismanagement (Daily Champion, 5th September 2003; Okike, 2007). This has been achieved through voting at AGMs.

4. Methodology

4.1. Data collection

The research method adopted in this study included a combination of qualitative interviews and observations. Twotypes of interview settings were used: semi-structured interviews and focus groups. Interviews were adopted becausethis method allows researchers to capture investors’ perceptions and thoughts on their meetings with corporate managers(Hendry, Sanderson, Barker, & Roberts, 2007). This approach has been adopted in prior studies examining the activities ofshareholders’ associations as well as private investor meetings and AGMs (Adegbite et al., 2012; Catasús & Johed, 2007;Roberts et al., 2006). The interview data were collected mainly from shareholders’ associations because of the centrality ofthis group in shareholder activism in Nigeria. Furthermore, shareholders’ associations are the focal point of the research. The


respondents appeared to be quite knowledgeable and experienced. This could be attributed to the length of membership.The profile of the respondents showed that most of them held membership in one or more shareholders’ associations in thelast two decades.


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A brief summary of the interviewees’ profiles is stated in Table 1. The interviews were conducted with 19 membersf 14 different shareholders’ associations in the different regions of Nigeria and with an activist who was not a memberf a shareholders’ association. However, the activist frequently attended AGMs and private meetings, according to severalespondents. The respondents made it clear that the activist was an important player in the market. The focus group is lessommon as a qualitative research strategy. However, it allows rich data to be collected from a wider range of participantsn a group within a given time frame.

In our study, the focus group was held with 11 and 7 participants from independent and government established share-olders’ associations, respectively. The two focus groups consisted of a mix of executives and ordinary members of the twoypes of shareholders’ associations.

The observations offered an avenue for the independent examination of ritual practices, an approach that has been usedn prior literature (Apostolides, 2007; Biehl-Missal, 2011). The observations included AGMs and shareholders’ associations’rivate monthly meetings. In the course of the field work, it was found the routine of shareholders’ associations in Nigeriasually involves attending a monthly private meeting restricted to members only and public meetings with corporateanagers. However, the researcher was granted a rare insight into the world of shareholders’ associations through their

rivate monthly shareholders’ meetings. The respondents were of the opinion that these private meetings were pivotal inhaping their actions at an AGM. They extended an invitation to one of the authors to attend this meeting.

.2. Data collection process

Both semi-structured interviews and focus groups were held after the observations of AGMs and the shareholders’ associ-tions’ private monthly meetings. The focus groups lasted at least 45 min. The semi-structured interviews lasted between anverage of 30 min to an hour. Anonymity was assured before the interviews commenced. The real names of the participantsnd their shareholder associations were replaced with pseudo-names such as FGP or FGL for shareholders’ associations andA 1 for individuals. The names of corporations mentioned during the interviews were anonymized. During both forms ofnterviews, a formal set of questions was administered. Interviewees were allowed to talk until they reached saturation.espondents were asked questions about the work of their associations, their meetings with companies, courts and AGMctivities, and their strategies, challenges and outcomes. The respondents were encouraged to talk about different share-olders’ associations, including their own, and including past and present activities. They spoke on dealings with corporateanagers and the motivations and rationales behind their association’s actions as well as personal experiences as a member.

he interviews were recorded, and the data were transcribed after the interviews.The observations included two meetings organized by different shareholders’ associations in the West and South of

igeria and by two AGMs. A non-participant observation method was adopted with the observer using hand-written notesnd two tape recorders to record the proceedings of all four meetings, which lasted over two hours. The meetings, as the unitf analysis, allowed the researcher to examine evidence of rituals in the organizations. The shareholders’ associations’ privateeetings created an opportunity to explore in detail perceptions on governance issues, shareholder interests, agendas and

outines. It provided an opportunity to evaluate how organizational ritual performance, the stylized behaviors of actors andanguages contribute to the building of group solidarity and identity and how this is linked to AGM rituals. The observationf two AGMs helped clarify how the shareholders’ associations’ took advantage of this setting in promoting their agenda. Thewo AGMs provided insight into how chants and cheers, which constitute a private part of one shareholders’ association’soutines at their monthly shareholders meeting, is shared in public to give meaning to their actions. To ensure anonymity,e have replaced the original names of the two companies whose AGMs were observed during the field work with pseudo-ames. We have chosen to call one of the companies mentioned in the empirical findings ‘DP Plc’.

.3. Data analysis

Recordings and notes from interviews, focus groups and observations were transcribed and manually coded during thenalysis. This allowed the researcher to become familiar with the data. The researcher worked through the data by system-tically categorizing the data and considering similarity in meanings. The data were revisited to improve the categorizationollowing prior studies (Hendry et al., 2007; Huberman & Miles, 2002). Coding involves the organizing and labeling of phrasesnd sentences that have similar meanings (Huberman & Miles, 2002). The development of the codes reflected emerginghemes drawn from interview discussions and responses to interview questions as well as the observation of meetingsnvolving shareholders’ associations. Finally, codes were produced for several themes covering different aspects, including

eetings, agendas, membership, committees, and strategies. Using ritual theory, the data gathered from the observation ofhe AGMs was categorized by drawing on ritual characteristics such as spaces (AGMs, private investor meetings and courts),ymbols, order, and artefacts (voting). This is highlighted in the context and the analysis in the empirical evidence.

The analysis indicated that AGMs in Nigeria were a ritual that involved role players and spectators in the productioneremony. In situ, it was observed that there were devoted regular attendees, including the board, auditors and shareholders’


ssociations. There were also journalists and representatives from the Nigerian Securities & Exchange Commission, whoay be classified as the audience, as this group does not directly interact with corporate managers. In terms of structure,GMs were formalized in the stage layout and design of the proceedings. The stage concept made the board members

ook powerful (Biehl-Missal, 2011). Board members were seated on an elevated platform with decorated tables called ‘high


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tables’. In contrast, the audience sat on a lower ground without tables. To the observer, this differentiation in the formal useof tables was a visible symbol of the location of authority and social power with the board. The distance maintained betweencorporate managers and small shareholders appeared to reduce the interaction levels and help maintain order.

It was observed that ritual artefacts facilitate shareholder performance, especially the registration of proxies as wellas refreshments and souvenirs. It was observed that the ritual registration of proxies occurred at the beginning of theAGMs. In one of the meetings, rows of seats were labeled, and separate seats were allocated to shareholders’ with proxy.This gave visibility to proxy voters. Another significant aspect of the ritual was the entertainment. Refreshment has beenfound by other authors to be a distractive artefact (Adegbite et al., 2012; Yakasai, 2001), and they conclude that refreshmentsprovided a motivation for shareholders’ associations to attend AGM meetings. Apostolides (2007), in his study of UK settings,calls these accommodations a subtle form of bribery by companies. However, the researcher observed that some leadersof different shareholders’ associations and their followers seemed to ignore the refreshments and souvenirs. Nonetheless,there were crowds of people who participated in this rite. In Nigeria, refreshments are a traditional ritual at meetings.Based on observation, we argue that refreshments symbolize group communion for members at monthly meetings oractors-participants at AGMs. This artefact provides a visual sign of the formal closures of a meeting while simultaneouslystrengthening the social relationship of participants through informal discussions as part of dispersal activities.

5. The benefits of rituals: private meetings, AGMs and courts

5.1. Private investor meetings:

The interviews suggested that the shareholders’ associations had private investor meetings with corporate managersbefore AGMs. These meetings provided an opportunity for the shareholders’ association to pose questions to managementabout the operation of the business.

“We do not actually wait for this once in a year ritual, this AGM, before we ask questions. We monitor developmentsinside some of these companies. We write letters to them. . .We demand factory visits and we go there. . .. We wantto know what value will be added..” [SA, 2]

It was observed that members of the shareholders’ associations received briefings on the meetings during the monthlyshareholders’ meetings.

“In the past month, we held several meetings. One was yesterday at Company X. . .Bank Z, we visited onTuesday. . .During the month, and we visited Company Y. We had discussions with the board and management. . .”[Monthly meetings]

Private investor meetings at corporate offices acted as a secret ground for enlightening shareholders on and resolvingpotential conflicts relating to management-proposed agendas.

“Some companies organize what we call a shareholders forum. You cannot get all the information on any company inthe annual report because of their competitors. There are certain facts they do not want to be public knowledge. Atsuch a forum, a closed door meeting, mostly in the premises of the company...” [SA8]

“Also, companies do arrange pre-annual general meetings whereby issues that may be contentions at the AGM areexplained and time is given that may not be available at the AGM. . .” [SA11]

Representatives of different shareholders’ associations privately shared their concerns about proposed agendas at pre-AGM meetings with management. The meetings involved some form of negotiation between both parties on mattersconcerning board nominations and AGM agendas.

“. . .Two things can happen at instances of such meetings [private]... They either drop such a nominee and theybring another one. . . sometimes the meeting is suspended. They choose another day when they can have anotherconsultation. . .” [SA, 11].

The excerpts above and below highlight the extreme lengths to which companies are willing to go to avoid disharmony atAGMs. Repetitive consultations and abandoning some items on the agenda show the efforts made to reconcile the interestsof both parties.

“Many companies, before their AGMs, invite us to have meetings with them. There are many instances where, as aresult of the meeting we had with them before the AGM, some of the items listed on the agenda had to be abandoned”[SA1]


“What normally occurs is that there must be a pally [slang for negotiations]. If there is a stalemate, there must be apally between the shareholders and the management to resolve the issue” [SA16].

The interview quotes indicate that the meetings between management and the shareholders’ associations were usedto resolve issues that might cause disagreements at the AGMs. The reconciliation of interest and shared understanding


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as meant to discourage any form of deviant behavior capable of disrupting the social order at AGMs. We find evidencef disharmony between shareholders’ associations and management in instances where issues remained unresolved afterhe private investor meetings. At one AGM, for example, it was observed that a representative of FGL, a large shareholders’ssociation, was critical about the management of a company (DP Plc). He criticized the management on their executiveompensation scheme. He demanded to know why the board increased their remuneration despite its current financialrisis. He was quite critical about the board’s performance and the auditor’s report on corporate liabilities and insolvency.nother shareholders’ association representative wanted to know why an additional chairman statement on separate sheetsas distributed during the AGM. This revised chairman’s statement was different from the one in the annual report andas only given to shareholders who were present at the AGM. This particular corporate action was viewed as deviating

rom institutional scripts associated with yearly AGM rituals. The normal routine is to have one version of a chairman’statement in the annual report for the year. The representative, in speaking to the chairman, stated, “first thing tomorroworning, in not less than 3 national newspapers, you must publish this additional statement. . .the consequence of not doing

o will be much more than the money you have spent. . .” (FGL). The request by the shareholder representative resembled ahreat.

This rebuke was greeted with a round of applause with cheering and chants from the audience. This cheering behaviorppeared to be scripted. It was observed that during FGL’s monthly shareholders’ meeting, the members were instructed toive a round of applause with cheers when their representative gave a speech at an AGM. “. . .when any member of FGL speaks,t is followed by a round of applause. . .” [Focus Group 2, member]. Chants were rehearsed during the same meetings. It wasbserved that new members were requested by an executive member of FGL to learn the organization’s chant. They wereade to repeat the chant out loud before other members. “[Name of the shareholders’ association] progress! [Name of the

hareholders’ association] unity!” The old members also joined the new members to recite the chant. In situ, it was observedhat the intensity of this communal chant appeared to create a vibrant feeling of group cohesion and unity. According to

cComas et al. (2010, p125), group solidarity is facilitated by the “power of group psychology” in ritual practice. Groupongs signify unity (Sosis and Alcorta, 2003).

At the AGMs of DP Plc, it was observed that the cheers mixed with chants sung by members of FGL appeared to overtlyntegrate non-members with similar beliefs who joined the performance. This ritual performance by the audience appearedo give a sense of solidarity to the shareholders’ associations. More so, the cheers and chants seemed to validate their actions ‘rebels’. This behavior upset the chairman, who bore the brunt of the blame compared to the managing director, wholayed a less prominent role at the AGM. Analyzing the chairman’s tone of response, this confrontational behavior appearedo evoke a feeling of anger. The chairman threatened to stop the ‘shareholder section’ unless the remaining shareholders’ssociations who were about to speak followed the agreed script.

“You have two minutes, I am serious. If there are things you want to discuss with us, you have access not only to myoffice but to my house. You have been there before . . .I do not think that you can use this forum to discuss things thathave been resolved before. . .” [Chairman at the AGM]

This excerpt from the chairman’s statement shows that deviation from the script on the part of the shareholders’ asso-iations has the potential to trigger disharmony at the AGM. It was observed that the chairman’s attempt to manipulatehe less than rigid structure of the ‘shareholder question time slot’ appeared to hold disciplinary significance to some smallhareholders’ associations that spoke after this incident. They quickly praised the management. This response illustrateshat the chairman’s warning might have contributed to the maintenance of order at the AGM. Overall, our findings suggesthat disharmony occurs where the private meeting had not fully resolved the differences between management and somehareholders’ associations. Interviews and the focus groups confirmed that in this case, some shareholders’ associationsad held private meetings about the state of this company [DP Plc] before the AGM. In one of the excerpts, the respondentecognized that his shareholders’ association was informed in advance about the company’s state of affairs: “. . .there is thisompany DP Plc, they shouted out by calling us some months ago. They showed us the situation.” [Executive, Focus Group]. However, the private meetings called by the management concerning the state of the company had failed to generateupport from some of the large shareholders’ associations.

.2. Annual general meetings

The ceremonial attendance of AGMs in Nigeria was found to hold substantive value for shareholders’ associations. Itased the process of communication of shareholder interest because it enabled shareholders to bring their proposals to thettention of management during the AGM. A respondent [SA 18] reported that shareholders put forward their agenda toanagement on the day of the meeting. This enabled the shareholders to avoid the difficulty of including their proposals as

art of the AGM agenda. According to Okara, Atekebo, & Nwanze (2007), directors only need to establish that the proposal isf a defamatory nature in court to avoid circulation. Interviews suggested that the shareholders’ associations regularly coped


ith the legal obstacles by presenting their proposals during the shareholder question and answer section of the AGM.

“Some people were trying to bring proposals. . ..to push to have it as part of the agenda. I do not think they havesucceeded. . . the way we have gone around it [to avoid rejections] is when you get to the AGM, if you have anyproposals, you say it at the AGM, proposal on dividend, proposal on the way they should run their subsidiaries. People


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actually come to the AGM and bring their proposals and those proposals are minuted and become part of the meeting,but it is not a standalone proposal” [SA18]

“This issue of AGM is very important. Any company that does not behave in a way members like, they have the rightto the floor. The day of the AGM, it appears that the directors listen more to the ‘floor’. . ..Issues include dividends thathave not been paid regularly. . . they did not receive their annual report before the AGM, members will complain. . ..in most cases, members do cry out to the companies and most of them respond effectively” [SA4].

The consensus was that companies take shareholder proposals seriously. This positive response effectively enabled orderto be sustained without provoking disharmony. The interviewees were of the opinion that AGMs are beneficial in pro-viding a platform for shareholders to share their concerns with management on issues related to dividends and annualreports. A possible explanation could be that corporate managers face a greater amount of public scrutiny at this site.Roberts et al. (2006, p.282) suggest that “scrutiny is a source of anxiety about whether the company will be seen andliked, and if so whether it will be seen accurately or correctly. It is this anxiety that creates the appetite for meetinginvestors. . .influencing the content of the picture”. Another perceived value of AGMs was that it provided shareholders’ asso-ciations an opportunity to make their voices heard. They viewed their vote as crucial in determining the outcome of boardappointments.

“At the annual general meeting like this, you know it is the shareholders that ratify an appointment . . . We eitherapprove or disapprove. If we disapprove, we let them know by voicing our opinion” [SA12]

“At the AGM . . . if the shareholders do not turn up, the company has already carried the day [meaning the company haswon]. You go there and mobilize [slang for act] and make sure you make it difficult for that agenda to pass through...You don’t adjudicate your role” [SA11]

Three of the interviewees were of the opinion that attendance of AGMs was particularly important where there was adisagreement with management on an agenda. They were prepared to use their votes to challenge management and shapethe outcome of the voting process.

“When we come to AGM, we do not come to disrupt the plans of the company. . . . if we objected to some of theirprograms, they now know that they have to go back and rethink and come up with something that is better foreverybody” [SA16]

The general perception appeared to be that AGMs were used as an opportunity to challenge management when theshareholders did not support the proposals put forward at the meeting. In Nigeria, the voting procedure at AGMs on man-agement proposals and directorship is based on a show of hands in accordance with the company law (CAMA, 1990). It wasobserved that the show of hands was used during the AGM elections for directorship. The law allows the use of poll voting.The interviews revealed that the management of companies use poll voting to force shareholders’ associations to acceptmanagement proposals, where management had the backing of core investors. In this instance, the number of votes hadgreater weight than a physical calculation of the numerical strength of small shareholders present at the AGM.

“...Two things can happen at instances of such meetings [AGMs] if the company wants to ram it down your throat, theygo by poll voting. . . Sometimes the shareholders are more in number, but they do not have the strength in poll. . .thecompany that has a core investor at 50%, definitely, we know they carry the vote” [SA11].

This situation was a cause for concern for shareholders’ associations when they had fewer votes collectively. Apostolides(2007, p. 1278) notes that small shareholders are unlikely to call for poll voting, “as such voting places them at a comparativedisadvantage because of the weight element”. We find that, on occasion, shareholders’ associations were able to obtainproxies in advance. Two respondents indicated that the strategic planning and rehearsed performance displayed whenregistering proxies was viewed as an important mechanism for influencing the behavior of management. SA3 notes that thefear of the impact of proxies submitted by shareholders’ associations had the power to make executives listen, as observedin the quote below, in which he explains how the proxies are obtained,

“. . .I can tell you the largest shareholders of Company J . . .I can walk up to him and say we are going to CompanyJ’s AGM... This person is not doing well. We want to remove this person, give me your proxy. I will collect his proxy.Because we are very close to them, the company cannot go and pick it . . .for a lot of these people, we gave them theapplication form to buy shares . . . They will give me the paper and I will go and submit it. Eventually, I will know thedetails of the person. In some cases, I will even put our address so that when they are posting the annual report, itgoes straight to us....I will collect the proxy and make sure it is registered. . .[SA3]

SA3 goes on to explain how the theatrical registration of proxy votes at AGMs constitutes a preemptive action that helpsreconstruct the balance of social power.


I will go to the AGM . . . When you are going to register [proxies], they see it. It is not hidden...you can turn and saychairman, ‘I am calling for a poll vote. . .Mr A and Mr B are supporting me. . .that is what the law says I should do. . ..’He knows that what I have with me is enough to pull him out of the place, so you will see that when I am talking, hewill listen me” [SA3]


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To the respondent, the possibility of shareholders’ associations winning through poll voting was considered a potentialhreat by management. Winning the poll vote through the use of proxy votes meant that, for board elections, a chairmanan be removed from his position [pulled out of his place]. The use of proxy votes in poll voting was taken seriously byanagement. It was observed that management paid attention to the play out of the ritual game through the registration

rocess. The proxies were registered in a separate book under the watchful eyes of management representatives at theeginning of the AGMs. At one of the AGMs, the seating arrangements were labeled in a manner that required shareholdersith proxies to be seated separately from the other shareholders.

.3. Courts

The benefits of filing cases in court were explicitly recognized by the shareholders’ associations. Courts provided a settinghere shareholders were able to air their grievances within the boundaries of the law.

“The law has clearly stated the rights of shareholders to get things done through the board of organizations that theyhave interest in, so they may do that through display of their disapproval at the AGM of the company. They can convenean extraordinary general meeting of the company in order to drive home a particular concern that they have. Theycan go to a court of law and seek specific redress” [SA14].

The interviews suggested that the shareholders’ associations decided to take the management of a company to court in situation where AGMs did not provide a fair opportunity for shareholders to make their voices heard. “AGM is a placef democracy; when this is not a democracy, there is no place to go but to court” [Monthly meeting]. At the meeting,he shareholders’ associations’ discussions on democracy centered on the fairness and transparency of the voting processnvolving a board election. To address this problem, shareholders’ associations have been known to file cases in court.he interviews revealed that corporate managers may decide to put up a defense in court or settle out of court. In therst instance, corporate managers were willing to challenge the shareholders’ associations that filed the case in court. The

nterviews suggest that court filings were used to discipline directors who refused to adhere to good corporate governanceractices. The interviews mentioned the problem of board members seeking to remain in post after their tenure elapsed. As

respondent indicated, “when we discover that the board is not ready to step down, we go to court” [SA15].

“Occasionally, we have gone to court and gotten an injunction against many of them. Bank X is a personal case. Wewent to court and stopped the managing director when we found out he was not serving our interest. . .we went tocourt and got him out” [SA3]

This excerpt indicates that courts cases are filed against management when their actions are considered detrimentalo the interest of small shareholders. It was observed that the status of court cases filed by shareholders’ associations wasiscussed at the monthly shareholders’ meetings. The members of the observed shareholders’ associations were given anpdate of the court cases. The emphasis was on following through with pending cases in court as long as management wasnwilling to engage in private negotiations.

In the second instance, court actions were understood to be shadows of the real intermediary outlet, namely, privateeetings with corporate managers. Here, ‘threats of’ and ‘filings’ in courts were considered influential techniques that

eproduced power for shareholders’ associations, according to the interviewees. These two court artefacts made managementensitive to shareholder actions, resulting in a decision to avoid confrontation in court by agreeing to negotiate out of court.he pattern was for shareholders’ associations to adopt the role of ‘confronters’ by threatening to go to court or file a courtase, and management were pushed into the role of ‘reactors’ by agreeing to negotiate. The disagreement was mainly overhe appointment of a board member. Board members were accused of refusing to step down at the end of their tenure.

“We discovered that when the board is not ready to step down, we go to court . . ..A reasonable board will not allowits shareholders to go to court. . .They will call for resolution. We employ a conflict resolution strategy to resolveissues, at times it will be 50/50 [meaning a relatively equal compromise from both parties]. They would try to sort outsomething” [SA15]

This quote provides evidence of triumph in situations involving out-of-court settlement, particularly at the pre-verdictourt stage. The avoidance of a court verdict rather than an actual court verdict shifted the balance of power in a management-hareholder relationship. This is confirmed in the quote below.

“On crucial occasions, we have gone to court. Like we have 2 or 3 cases in court,... Then, there was this case of bank Ywhen the chairman was retired in May. Then, in May, he was looking for an excuse to spend another 3 months.....wethreatened that he could not do that. . .we wanted to go to court, we were able to reach an agreement. We were askedto withdraw our case” [FGL]


The signal of a court action, in this context, gave shareholders’ associations negotiating power in their dealings withorporate managers who were willing to resolve conflicts outside the courts. This demonstrated a connection among courts,rivate meetings and AGMs. This connection is yet to be established in the literature (Biehl-Missal, 2011; Catasús & Johed,007; Strickland et al., 1996; Roberts et al., 2006). In addition, court action can lead to the sentiment of conflict at private


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meetings. We find that the shareholders’ associations believed the threat of court action would elicit this sort of responsefrom management. The management’s unwillingness to go through a court process is depicted in the following quote. “Thelaw court is still there, no company would want themselves to be dragged to that level” [SA11]. The interviewees wereof the opinion that the managements of companies were less than eager to participate in a lengthy and expensive courtprocess. Court cases were considered time consuming and expensive. “You want to go to court. It is pretty expensive by thetime you pursue the case, one month [is gone]” [SA18]. “When you go to court, one year would have elapsed and anotherelection would have come and gone” [Monthly meeting]. The general opinion was that shareholders’ associations expectedthe managers of target companies to intervene by settling outside the judicial system.

5.4. Ritualization of AGMs: audit committee rites and Gamesmanship

In our discourse on the ritualization of AGM, we analyzed the audit committee rites. Our analysis reveals evidence ofgamesmanship. In the interviews, the shareholders’ associations expressed a keen interest in providing shareholder rep-resentation in the election of audit committee members at AGMs. Symbolically, shareholder participation in the auditcommittee rite provided the magic that was essential for creating a “visible sign of accountability” (Gambling, 1987, p. 326).However, we find evidence of a partial application of the rules that provide validity to audit the committee nomination pro-cess. Shareholders’ associations put forward audit committee nominees without the requisite requirement on the standardof financial knowledge or qualification to perform the duty. Gambling (1987, p. 326) states that accounting and auditingrituals have to be “validly performed” to work and to be acceptable within society. We find that this practice was not wellreceived by some members of the shareholders’ associations in Nigeria. They complained that this practice meant that skillsets were de-emphasized in favor of mere participation in ritual ceremonies. This view is depicted in the following quotes.

“If you look at the audit committees sometimes, the code will tell you have people who are educated in this area. . .on some of these committees, you do not have these people and there is no explanation. I would have thought thatthe company will say these are the people presenting themselves for appointment from the shareholders . . . we havea mixture of directors and outside shareholders . . .. One of the things we have against the shareholders’ associationis that they present people who are not educated in reading accounts as audit committee members” [SA13].

“The audit committee member that knows its onion [Nigerian proverbial expression for knowledgeable], that canask questions is always butted out within twelve calendar months. There was a case of Company X, where auditcommittee members came in today and because they were knowledgeable to ask questions, they were butted out inthe subsequent AGM” [SA2]

SA2 complained that a company had recently forced a knowledgeable member out of the audit committee for askingdemanding questions. Two chairmen noted that there have been cases where companies make it difficult for nominatedaudit committee members that were considered financially sound to perform their jobs independently. They were unhappywith the current practice, where other members without requisite financial skills or knowledge were appointed to the auditcommittee role. The views expressed by SA2 and SA3 suggested that the quoted companies did not do much to change thispractice.

“. . .As much as possible, the people should be knowledgeable and have experience . . .differentiate a debit from acredit. . .should be able to know what is ethical, . . . They should not be people that will serve the interest of themanaging director. ‘Oh, if I do not perform, do not support the managing director, he will mobilize [slang for ‘takeaction’] and remove me. This is what is happening today in the system . . ..” [SA3]

SA3 notes that the focus appeared to be on pleasing management rather than ensuring that knowledgeable memberswith the requisite financial skills were appointed to audit committee roles. The interviews indicated that shareholders’associations had other reasons beyond auditing duties for participating in this rite. The shareholders’ associations wereinterested in their members gaining a seat on audit committees because of possible access to insider information.

“Quite a number of associations and their leaders use this as a basis of getting insider related information and oncethey get it, they take advantage of it and it becomes a fringe benefit” [SA19]

An executive of a shareholders’ association appeared to deem this practice as normal, as observed in the following excerpt:

“We should be in a meeting like this, and a member of the audit committee will now tell us what is happening in yourcompany” [Executive, Focus Group 1]

The desire to get their members voted into audit committee roles fostered intense rivalry among the shareholders’associations for audit committee nominations. The following excerpts illustrate the intensity associated with this rite as


groups compete for open spots.

“As far as activism for shareholders’ associations is concerned. . .whenever there is election into an audit committee,you see the interplay of intrigues. You see the shareholders outwitting each other, getting some people voted out andgetting some people voted in” [SA14]


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“Quite a number of them, because they want a seat on the audit committee, they go all the way to get proxies. So therivalry is increasing over time. It is going to be a major problem.” (SA19)

There was a clear determination to get members of their respective shareholders’ associations nominated into auditommittees by beating rival shareholders’ associations.

“In fact, this time around we are talking about any AGM holding in X [their state], we must file our 3 nominations, andwe must greedily grab all of them” [Focus Group 2]

There was evidence of gamesmanship in the race to elect a representative of the shareholders into the audit commit-ee. The interviews suggested that most elected representatives of shareholders in audit committees held a membershipffiliation to particular shareholders’ associations. The shareholders’ associations ensured that they had a large number ofembers present at AGMs to vote their chosen shareholder representative into the audit committee of a target company. The

nterviews also revealed that their success in electing their representative into audit committee nominations was dependentn their ability to play the numbers game rather than financial literacy. “The game we are playing is not on literacy, it haso do with numbers. That is the fundamental truth” [FGP Chairman]. A chairman recounted an AGM experience where hebserved the level of rivalry between shareholders’ associations from the west and his shareholders’ association. He par-icularly noted that shareholders’ associations from the western part of the country were more successful because of theirtrategic use of the numbers game. The implication for his shareholders’ association was that they left the AGM with noember elected into the audit committee. Essentially, the chairman’s shareholders’ association came out of the AGM with

othing to show for their effort.

“We have that disadvantage of numbers. Many times, the companies have held an AGM here and we go there and wefight. In fact, in Nigeria today. . .They know it is a game of numbers. . .. by the time we get there, we have nothing eventhough we have submitted nominations for audit committees. . ..Whereas they (the shareholders associations from thewest) have loaded four busloads of coasters with women from Lagos to come and vote. . .They are so organized. . .thewomen know why they are coming. . . when they get those positions . . .those people [elected members] try to carrythem along” [FGP Chairman]

“. . ..We noted the politics of what you can call activism. The politics played by our western brothers. Right under ournose they came all the way from Lagos and Ibadan and collected all the elective positions of the 3 audit committeemembers. They were all collected by Lagos and Ibadan based shareholders” [FGP Executive member]

The shareholders clearly noted that the positions on the audit committee won by the shareholders’ associations fromhe western part of the country were won by playing the numbers game. According to Macdonald and Kam (2007), games-

anship is about winning through established activities. We find that shareholders’ associations brought a large number ofhareholders to the AGM to physically vote to win games. This required a form of advanced preparation. Strategic prepara-ion in advance involved identifying members with shares within a target company. The shareholders’ associations gatheredroxy votes to consolidate a win and persuaded members at the shareholders’ meetings to turn up at the AGM to show theirupport. A methodical process appeared to be followed, as one of the successful shareholders’ associations explained. Theespondents indicated that they had a planning committee to address audit committee nominations. The committee washarged with the responsibility of identifying members who met the criteria for nominations, such as ownership of sharesn the target company.

“How shareholders’ association [name deleted] empowers members, we have what we call a planning and organizingcommittee that occasionally selects members and nominates them for audit committee membership of companiesand banks... They meet from time to time. There are certain responsibilities, planning and ensuring that whoever isnominated gains success” [FGL member]

“You know every member has files in the association here. If you are going to be on an audit committee, we have togo back to the files to see who has shares in that company. Then, we select 3 people for the audit committee. For theaudit committee, before you are able to win, you have to plan well because it is a game of numbers. You have manyassociations who will file nominations. Then, at the AGM, we have to go and compete amongst ourselves. The planningcommittee has to be there because of other people. Our ability to win is because there are times we get proxies. Weplace our proxies. If you are not able to come, you send proxies. It is a game of luck. That proxy cost 500 per proxy.Stamp duty requirement. You register it. That is a requirement. We do not mind if we have to register 200 proxies, ifan AGM is very competitive so that we beat the other associations. . .” [Executive, Focus group 2]

In Nigeria, audit committee nominations are traditionally executed through a show of hands, which is why the share-olders’ associations require large numbers of members to attend and vote. This show of hands is used in countries such ashe U.K. (Apostolides, 2007). Where there is a disagreement, CAMA (1990) recommends the use of poll voting. Therefore,


ome shareholders’ associations prepare by bolstering the physical numerical strength of votes present and collating votingroxies in advance for the meetings. This tactic is used to address the intense competition between different shareholders’ssociations for audit committee nominations. Success at the audit committee nominations was announced to members ofGL during the observed monthly shareholders’ meeting.


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We were also lucky yesterday: we retained our audit committee seat on the platform of Bank N. . .that is why I continueto advise our members....I want to use this opportunity to appeal to members that it will be very nice to see our peopleat AGMs. . .” [Monthly meeting]

It was observed that during the monthly shareholders’ meeting, an announcement was made that members shouldprovide details of the companies where they hold shares. They were encouraged to buy shares and attend AGMs. The quotesshow that the members of this shareholders’ association appeared to use the word ‘lucky’ when explaining their success. Thisappeared to suggest that they did not take their achievement for granted. This excerpt shows that members were remindedof their role in the game. Altogether, we find that the interviewees were of the opinion that the planning and execution of alargely successful rite requires a sufficient number of participating actors to generate a good outcome.

6. Concluding remarks

In this paper, we examine the context of Nigeria. This paper specifically seeks to address two main research questions:how does the interconnectedness between private rituals (private shareholder meetings) and public rituals (AGMs andcourts) produce psychological and functional benefits for shareholders’ associations? What strategic acts do participantsin groups (i.e., shareholders’ associations) use in ritualization? Our main findings are four fold. First, we demonstrate thatthe connection among private investor meetings, AGMs and courts was considered beneficial for the shareholders’ asso-ciations. These rituals together encouraged conflict resolution, which was necessary for the maintenance of social orderand harmony. Second, we find that private investor meetings are relevant in resolving conflicts that can potentially disruptthe order and harmony at AGMs. This ritual provides a channel for shareholders’ associations to synchronize the manage-ment’s agenda with shareholders’ interests. Private investor meetings play a significant role in influencing shareholders’associations’ adherence to a predetermined script at AGMs. However, we also find that the failure of private investor meet-ings to meet this goal results in disharmony at AGMs. Disharmony was observed in voting and role playing acted out atAGMs. Our findings also suggest that courts demonstrate disharmony between shareholders’ associations and management.Shareholders’ associations considered courts as a useful forum for tackling unresolved conflicts at AGMs.

Third, our findings reveal that when private meetings fail to reconcile the different interests, the AGM space offers anotheropportunity for shareholders to communicate their demands. This ritual was crucial to the shareholders’ associations, asthis ceremony was expected to allow them to express themselves within an ordered format that aimed to minimize conflict.The shareholders’ associations considered the opportunity to communicate their proposals and participate in governance asvaluable. In essence, the representatives of the shareholders’ associations considered AGMs to be “rituals of accountabilitythat act as a forum for the demands of shareholder accountability while fulfilling the interests of corporate governorsthemselves” (Jeacle, 2008, p. 455). AGMs were not viewed by shareholders’ associations as empty rituals, in contrast to priorliterature that questions the benefits of AGMs (De Jong, Mertens, & Roosenboom, 2006; Norden & Strand, 2011; Solomonet al., 2000). Fourth, our findings contrast with prior studies that suggest that rituals harmonize groups through similar ordifferent shared meanings. Our findings suggest that ritual rites are capable of creating (dis)harmony between groups. This isexemplified in the competition for audit committee roles and confrontations at AGMs. Nominations into an audit committeerepresent rites that routinely pit shareholders’ associations against each other at AGMs. This situation weakens shareholdergroup solidarity, as opportunistic agendas become the priority for each group.

Overall, this study makes the following theoretical contributions. The first contribution is that we extend current the-oretical knowledge on rituals and ritualization. While prior studies suggest that private (private investor meetings) andpublic rituals (AGM) offer symbolic benefits to shareholders’ associations (Strickland et al., 1996), we explain why sharehol-ders’ associations consider both rituals, including a relatively overlooked ritual space, namely, courts, as offering more thansymbolic benefits. Our second theoretical contribution is that we identify the use of numbers as a form of gamesmanshipin ritualization. We show how groups participating in rituals may gain strategic advantage over competition through theuse of gamesmanship. Our findings provide specific instances of when and how shareholders’ associations can use numbersgames at AGMs to gain strategic advantage over their opponents. The shareholders’ associations that are unable to competeby using the numbers game lose out to their competitors. The evidence suggests that competitive behavior was driven bythe shareholders’ interest in insider information with respect to a target company. Essentially, games were played to survivein the environment and obtain rewards. Members of shareholders’ associations in Nigeria consider representation on auditcommittees to be a valuable mechanism for dealing with information problems associated with listed companies in thecountry. In the past, there have been cases of listed companies collapsing unexpectedly, while others were found to haveengaged in creative accounting or fraudulent practices. It has been argued that shareholders have suffered financial losses ontheir investments because of the lack of sufficient and transparent information in Nigeria’s market. This is why shareholders’associations have resorted to different tactics to obtain insider information on the state of affairs of companies (Owolabi,2007; Okike, 2007).

Our third contribution is that our study extends the work of Gambling (1987) on accounting for ritual. The author


acknowledges the symbolic value of rituals. Our study reveals the substantive value ritual provides to participants. Weprovide empirical evidence that illustrates how corporate accounts become a part of rituals and are transformed into a“visible sign of accountability” (Gambling, 1987, p.326). We do this by identifying established rituals of accountability thatmake corporate executives feel most accountable to shareholders (Nussbaum, 2013). We show how shareholders’ religious


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articipation in shareholders’ associations appears to complete rituals. Gambling (1987) acknowledges the role of gamesn rituals. We extend the current understanding of rituals by providing insight into how gamesmanship plays a vital rolen ritualization. At the same time, we follow a growing number of scholars who have responded to Bell’s (1992) call foresearchers to explore ritualization (Johnson et al., 2010; McComas et al., 2010). Our exploration of ritualization at AGMsuggests that the art of gamesmanship in this context is clearly a process that promotes self-interest (Bart, 1989; Macdonald

Kam, 2007). In our study, subtle evidence of gamesmanship was observed in the account of a shareholder regarding polloting.

Our study on ritualization has practical contributions. It provides insights for shareholders’ associations. It shows thathareholders’ associations may use the game of numbers in countries where shareholders’ associations have large member-hip, such as the Swedish shareholders’ association (Sveriges Aktiesparares Riksförbund) and the Australian shareholders’ssociations. In the absence of competition between shareholders’ associations, a range of tactics that involve a form ofamesmanship may be applied in negotiations with corporate managers based on the prevalent governance features asso-iated with the environment. Our findings suggest that numerical size can be beneficial to shareholders’ associations. Theirize can signal endorsement by a large segment of individual investors in countries where shareholders’ associations havearge membership. The strategic use of numbers to participate in the corporate governance sphere may build legitimacy and

ider recognition. For example, the Swedish Shareholders’ associations are represented on nomination committees thatote on board membership (https://www.teliasonera.com). They were invited to and participated in the development of thewedish Code of Corporate governance (Swedish Code of Corporate Governance, 2004).

In sum, this study shows that ritual theory is useful in offering a distinct foundation for concluding that rituals can be eithereaningless or valuable to participants (see also McComas et al., 2010; Lewin & Green, 2009). McComas et al. (2010, p. 122),

sing ritual theory, argue that while the “tangible outputs of rituals” in public spaces are not easily observable, they do exist.hey posit that an appreciation of the value of public rituals to participants would go a long way in enabling officials addresshe “challenges of maintaining participation when rituals lose their meaning”. It is important to note that ritual theory, ass common with theoretical frames, has its limitations. For example, it is unable to quantify the effect of ritualization. Theocietal values of rituals, while important, tend to be intrinsic and thus difficult to comprehend and quantify (Goodsell, 1989;cComas et al., 2010). Additionally, this frame provides limited explanation of the role of institutional structures in shaping

hareholder behavior. However, ritual theory enriches our understanding of rituals and ritualization in accounting research.t is important to note that shareholders’ associations exist worldwide, and their participation in rituals is well-known.owever, caution needs to be exercised regarding the generalizability of the findings. It appears that the findings presented

n this study would be applicable to countries where shareholders’ associations use private meetings, AGMs and courts asart of their core strategy. We refer to countries within Europe and Africa that have similar corporate governance models,amely, models that are characterized by question time at AGMs as well as opportunities for shareholders to gain nomination

nto the committees. The use of gamesmanship by shareholders’ associations is more relevant to countries mimicking thenglo-Saxon model, where voting may include a show of hands or poll voting.

cknowlegments

We wish to thank the Editor, Glen Lehman and reviewers. A special thanks to Dr Kym Thome and Prof John Mckernan. Were grateful to delegates from the American Accounting Association (2013), European Accounting Association (2013) andritish Accounting and Finance Association, Accounting and Finance in Emerging Economies Special Interest Group (2013)

or their comments.

ppendix A. Appendix 1

Shareholder associations in NigeriaBelow is a list of shareholders’ associations in NigeriaThe Government-established zonal shareholders’ associations

I. Ibadan Zone Shareholders’ associations (IBZSA)II. Jos Zone Shareholders’ associations

III. Kaduna Zone Shareholders’ associationsIV. Kano Zone Shareholders’ associationsV. Lagos Zone Shareholders’ associations

VI. Onitsha Zone Shareholders’ associationsII. Port Harcourt Zone Shareholders’ associations


The prominent independent shareholders’ associations

I. Nigerian Shareholders’ Solidarity Association (NSSA)II. Independent Shareholders’ Association of Nigeria (ISAN),


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III. Progressive Shareholders’ associationIV. The Association for the advancement of Nigerian ShareholdersV. Shareholders Trustee Association

VI. Renaissance Shareholders’ association of NigeriaVII. Shareholders United Front

VIII. Association for the Advancement of the Right of Nigerian Shareholders, etc.

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accounting for rituals and ritualization: the case of shareholders’ associations

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