American investors have been the most active on this front, filing resolutions that called on companies to cease doing business in South Africa during Apartheid, cease using animals for testing drugs or cosmetics, or to withdraw financial arrangements perceived as unfair. Recently, some large American investors have sponsored resolutions aimed at companies in other countries as well. While the majority of shareholders chose to go along with the company's vote against the resolution, such resolutions send a clear and powerful signal to directors that they are accountable to the interests of shareholders. Unfortunately, companies in Central Europe lack the advantages of well-developed domestic capital markets or experienced investors to ensure proper direction. To a large extent, investors there do not have access to the information vital for proper investment decisions, such as past stock performance or companies' profitability and outlook.
Shareholder resolutions are unknown.
As a result, most investors in Central Europe are ill-equipped and must operate in a vacuum. However, all is not lost. Increasingly, local investment funds are amassing large stakes in dozens of companies and are beginning to play the role of institutional investors in the West. These new funds may be able to force directors to deal with major issues such as laying off excess workers to achieve profitability. Viktor Kozeny of Harvard Capital in the Czech Republic, for example, has said that he wants to lay off about 75,000 workers in about 50 companies that he partly owns.