5/21/2026
Activist Pressure in Korea Rises as Value Gaps Spur CEO Shake-Ups
Chosun Biz (South Korea) (05/21/26) Ki-young, Song
Recently, activism has quickly become routine in Korea's capital markets. Amendments to the Commercial Act and the value-up policy are strengthening shareholder rights and board responsibility, heightening market oversight of corporate management. In practice, global activist funds continue to press domestic listed corporations for larger dividends, share cancellations, and business restructurings, and in some corporations the push has expanded to board overhauls and management changes. Behind this change is a structural shift in investor expectations. Boston Consulting Group (BCG)'s Investor Perspectives Series shows that investors are demanding both short-term performance and growth investment with active capital allocation. Activism is less a particular investor's strategy than a result reflecting elevated market expectations. Even so, many management teams perceive it as external pressure. But the essence of activism is not strategy; it is a gap in value. According to global activist campaigns analyzed by BCG's ValueScience® Center in Dec. last year, about 48% of all campaigns concentrate on the so-called "undervalued zone," where total shareholder return (TSR) and valuation are both low. If this gap is left unattended, risk becomes reality. The likelihood of replacing the chief executive officer (CEO) rises by about 24%, and many corporations experience a relative TSR decline within a year after activist involvement. The problem is that value damage does not surface like a crisis. Corporate value weakens gradually through the management team's repeated decisions rather than collapsing abruptly. Conservative guidance, for example, may be stable in the short term but acts as a signal that lowers long-term growth expectations. BCG's recently released "The CEO's Value Test: Think Like an Activist, Deliver Like a Leader" shows that investor expectations have already shifted. More than half of investors demand both performance delivery and growth investment, and 36% prioritize growth over short-term results. In contrast, the share that focuses only on short-term performance remains in the 10% range. If corporations cannot clearly explain their value-creation story, the market will interpret it for them, and perceptions formed in this process do not change easily. A structure in which strategy, finance, and investor communications are siloed also widens this gap. What is needed in this environment is not defense but a shift in perspective. BCG emphasizes that CEOs should think like activist investors. The key is to structurally understand the elements that make up corporate value. They must be able to explain how sales growth, profitability, valuation, and capital allocation connect to corporate value, and the entire management team needs to be aligned under a single value-creation agenda. Understanding investors is also important. Investors assess short-term returns and long-term growth by different criteria, and accordingly, a corporation's strategic messages may differ. Performance management systems likewise need to be redesigned so that KPIs and incentives are directly connected to corporate value. The most effective way to fend off activism is not to build a separate defensive strategy. Rather, it is important for management to prove corporate value before an activist investor raises issues. According to BCG's analysis, the direction of success or failure in activist campaigns is set within the first 90 days. In this process, market reaction diverges significantly depending on whether the corporation demonstrates clear strategy and execution. Ultimately, in an activist phase, speed and clarity serve as the key variables. This trend offers important implications for Korean corporations. Although many currently have strategies, they still show limits in explaining them in a way the market can understand. Investor communications are limited, and performance management systems often remain focused on internal efficiency. As a result, a gap arises between intrinsic value and market assessment, which leads to a long-term valuation discount. Much of the "K-discount," critics note, stems from this structure. Activism is no longer an avoidable event. As market structures change, it is becoming a managerial environment that corporations must face continuously. In the end, the choice left to management is clear: be dragged by market demands, or get ahead by defining and proving value on their own.
Read the article