U.S.-Style Investor Activism in Japan: The First Ten Years

Hamao, Yasushi; Kutsuna, Kenji; Matos, Pedro

doi:10.2139/ssrn.1785281

Cited by 18 publications

(31 citation statements)

References 10 publications

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“…Hamao et al. () and Uchida and Xu () focus on activism in Japan, and show that activists target firms with high cash balances and low payouts to shareholders, with limited success. This evidence suggests that institutional rigidities in Japan make it difficult for activists to effect change in the firms they target.…”

Section: Theory and Empirical Predictionsmentioning

confidence: 99%

“…Hamao et al. () report mixed evidence on the ability of activist investors to reform Japanese companies between 1998 and 2009; see also Uchida and Xu () and Buchanan et al. ().…”

Section: Theory and Empirical Predictionsmentioning

confidence: 99%

“…() and Hamao et al. (). Keidanren is an organization that represents the interests of the Japanese corporate sector and that has representation from over 1,300 Japanese companies as well as industry and local economic associations, with the self‐stated goal of supporting the “self‐sustaining development of the Japanese economy and improvement in the quality of life for the Japanese people” (http://www.keidanren.or.jp/en/profile/pro001.html.…”

mentioning

confidence: 97%

“…For discussion of activist investing in Japan, see Uchida and Xu (), Hamao et al. (), and Buchanan et al. ().…”

mentioning

confidence: 99%

“…Hamao et al. () and Uchida and Xu () describe how some foreign (US) investors push for improvements in governance in Japanese firms. A prominent example is Steel Partners, an activist US hedge fund that invested in Japan over this period, with mixed results (e.g., see “Message in a bottle of sauce”, The Economist , 29 November 2007).…”

mentioning

confidence: 99%

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Is Japan Really a “Buy”? The Corporate Governance, Cash Holdings and Economic Performance of Japanese Companies

Kato¹,

Li²,

Skinner

2017

Business Fin & Account

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We investigate whether Japan's much‐touted governance reforms improve its firms’ management of cash, economic performance and valuation. Consistent with an improvement in governance since 2000, Japanese firms hold less cash and increase payouts to shareholders. Improvements in performance are associated with reductions in (excess) cash, reductions in the influence of the banks that traditionally sit at the center of horizontal keiretsu, and increases in the holdings of management and foreign investors. The market valuation of Japanese firms’ cash holdings was lower than for US firms during the 1990s but increased to levels closer to those of US firms in the 2000s. Collectively, the evidence suggests that performance improves in those Japanese companies that reform their governance practices. These findings have implications for other Asian economies, such as China, India and Korea, where there are ongoing discussions of whether improved governance can increase firm performance and valuation.

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Section: Theory and Empirical Predictionsmentioning

confidence: 99%

“…Hamao et al. () report mixed evidence on the ability of activist investors to reform Japanese companies between 1998 and 2009; see also Uchida and Xu () and Buchanan et al. ().…”

Section: Theory and Empirical Predictionsmentioning

confidence: 99%

mentioning

confidence: 97%

“…For discussion of activist investing in Japan, see Uchida and Xu (), Hamao et al. (), and Buchanan et al. ().…”

mentioning

confidence: 99%

mentioning

confidence: 99%

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Is Japan Really a “Buy”? The Corporate Governance, Cash Holdings and Economic Performance of Japanese Companies

Kato¹,

Li²,

Skinner

2017

Business Fin & Account

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Corporate Governance and Corporate Performance: Case Study Japan

Kustner,

Waterstraat

2023

Contributions to Finance and Accounting

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Hedge Fund Activism in Japan under the Stewardship and Corporate Governance Codes

Miyachi

Takeda

2021

Int Adv Econ Res

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This study focuses on activist funds during the second wave of activism after the implementation of the Stewardship and Corporate Governance Codes in Japan. Based on reports of large-scale shareholdings (acquisitions of 5% shares or more) submitted by activist funds between 2014 and 2019, this study finds that the stock returns of target firms react positively to the intervention of activist funds. The positive correlation intensifies for funds classified as hostile or domestic. Unlike in the first wave of activism, activist funds do not necessarily target low-margin or undervalued firms in the second wave of activism. Comparing financial indicators of the targets of the pre-and post-acquisition periods of large blocks of shares by activist funds, return on assets tends to decline more than that of their matching peer control firms, while the dividend payout ratio tends to rise more. This study contributes to the related research in three ways. First, this study adds empirical evidence on hedge fund activism outside the U.S., which is still somewhat scant. Second, this study is the first in the English or Japanese language literature to focus on the second wave of activism in Japan. Third, this study presents empirical results that are distinct from those in prior studies focusing on the first wave, perhaps because institutional changes forced activist funds to focus more on engagement rather than selecting cheap firms.

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U.S.-Style Investor Activism in Japan: The First Ten Years

Cited by 18 publications

References 10 publications

Is Japan Really a “Buy”? The Corporate Governance, Cash Holdings and Economic Performance of Japanese Companies

Is Japan Really a “Buy”? The Corporate Governance, Cash Holdings and Economic Performance of Japanese Companies

Corporate Governance and Corporate Performance: Case Study Japan

Hedge Fund Activism in Japan under the Stewardship and Corporate Governance Codes

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