Case Study: The Development of Shareholder Activism in Japan since the Lehman Shock

Abstract

After a boom at the beginning of 21st century and a fade since the Murakami Fund Incident and the Lehman Shock, activism is on the rise in Japan. Few studies have covered this period, and even fewer have been made regarding aggressive activists involved in confrontations with management. By analyzing the investment cases conducted by the main players in Japan after 2008, the author found that the investment strategy of activists in Japan can be summarized as targeting stocks which are inexpensive, performance-solid, and vulnerable to capital policies. Differing from the US market, the main proposals of activists in Japan include sharing in buybacks and increased dividends, with less focus on management issues. The main exit approaches are either to answer repurchases and TOBs or to exit through the open market. M&A as an exit approach is seldom used. Concerning this data, the capital returns of the important activist players in the Japanese market are promising and stable.

TOPICS: Financial crises and financial market history, security analysis and valuation, developed markets, private equity