Governance vacuum: drivers of voluntary corporate governance adoption by emerging asset managers in South Africa

Abstract

The outcomes of corporate governance mechanisms in addressing the agency problem between shareholders and managers is well researched in extant literature. This has been extended further to the asset management industry to contextualise its importance to protect the interest of investors. However, South African emerging asset management firms operate in a governance vacuum, where prescriptive corporate governance requirements are absent and voluntary adoption depends on managerial conviction. This study explored how self-efficacy beliefs influence the voluntary adoption of corporate governance practices in such firms. Using self-efficacy as an interpretive lens, the study employed an inductive qualitative design. Twelve semi-structured interviews were conducted with executive directors across eight emerging asset management firms and were analysed thematically. The findings show that managerial confidence, built through learning by doing, credible external validation, and peer observation, drives voluntary corporate governance adoption when regulation is silent. The study also shows that psychological mechanisms like self-belief, resilience, and social validation can be substitutes for formal institutional enforcement. Accordingly, managerial self-efficacy acts as the behavioural infrastructure that drives voluntary corporate governance adoption. The study concludes that strengthening self-efficacy can close governance gaps, enhance legitimacy, and improve sustainability in South Africa’s asset management sector.