Activist hedge funds come to Japan

From Japan Today comes an interesting column by Yvan Allaire and Francois Dauphin:

Now foreign investors, holding over 30% of their shares, are unrelenting in their pressure for Japanese companies to adopt American-style governance. New governance codes have been written and Japanese stock exchanges are pushing for their implementation. Foreign money managers and institutional investors stand to benefit from changes in the ethos of Japanese companies which would make them more like American companies in their devotion to shareholder value creation.

That may be the inevitable outcome of a globalized financial market but Japanese promoters of this new governance orthodoxy did not quite understand that “good” governance provides the lever, the entry point for activist hedge funds and their cohort of supporters. These funds thrive, and can implement their standard recipes, only where publicly listed companies have no controlling shareholders and when they can robe themselves with the mantle of defenders of “good” governance.”

And they are now coming to Japan in droves. …

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