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

Abstract

After booming during the beginning of the 21st century and then fading after the Murakami Fund incident and Lehman shock, shareholder activism in Japan has begun to recover. After analyzing some investment cases of major players in Japan after 2008, I find that the investment strategy of activists in Japan can be summarized as targeting companies with cheap stock prices, deep pockets, solid performance, and a vulnerable capital policy. Compared with the US market, the main proposals of activists in Japan are share buybacks and dividend increases, and there is less concern with management issues. The main exit approaches are either to answer repurchases and takeover bids or exit through the open market. M&A as an exit approach is seldom used. The data indicate that the capital returns of the primary activist players in the Japanese market are promising and stable.