Unexpected Corporate Outcomes from Hedge Fund Activism in Japan

Unexpected Corporate Outcomes from Hedge Fund Activism in Japan

John Buchanan, Dominic Heesang Chai, Simon Deakin

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Date posted :

January 26 2018

Last revised :

January 26 2018
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  • Corporate governance • 
  • Japan • 
  • Institutions • 
  • Finance

Hedge fund activism has been identified in the USA as a driver of enduring corporate governance change and market perception. We investigate this claim in an empirical study to see whether activism produced similar results in Japan in four representative areas: management effectiveness, managerial decisions, labour management, and market perception.

Experience from the USA would predict positive changes at Japanese target companies in these four areas. However, analysis of financial data shows that no enduring changes were apparent in the first three areas, and that market perception was consistently unfavourable. Our findings demonstrate that the same pressures need not produce the same results in different markets. Moreover, while the effects of the global financial crisis should not be ignored, we conclude that the country-level differences in corporate governance identified in the varieties of capitalism literature are robust, at least in the short term.


Real name: 
John Buchanan
Real name: 
Dominic Heesang Chai