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Characteristics of Japanese Corporate Governance and Outcome of Hedge Fund Activism

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2016, (17), pp.29-51
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law

NOH MIE REE 1

1동아대학교

Candidate

ABSTRACT

Shareholder activism means exercising shareholder rights actively to enhance shareholder value. The most active form of shareholder activism is hedge fund shareholder activism (hereinafter “hedge fund activism”). Hedge fund activism emerged in the United States in the late 1980s and spread to Europe. Thereafter Japan became the third main site of hedge fund activism during the 2000s. Since the objective of hedge fund activism is to enhance shareholder value, when activist hedge funds were active in the 2000s, the efficiency of Japanese firms in theory should have increased, but the reality showed it did not. After discussing certain representative activist hedge funds in Japan, this paper analyzed the reasons that activist hedge funds did not succeed in Japan in relation to some characteristics of Japanese corporate governance such as cross-shareholding and Internalism. This paper also examined the recent trends in cross-shareholding and the changes of supervisory function of the board of directors. The contents of Japanese Company Law and the Korean Company Law are quite similar, and certain Japanese characteristics such as conglomerate(zaibatsu), enterprise group, cross-shareholding are also present in Korea. Therefore, it would be meaningful to examine the characteristics of Japanese corporate governance and the outcome of hedge fund activism in Japan.

Citation status

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