The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers

It is widely assumed that hostile takeovers are a prerequisite for an efficient system of corporate governance. This assumption is false. Since the new millennium, Japan has transformed itself from being on the brink of one of the largest economic meltdowns in modern economic history to currently be...

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Main Author: PUCHNIAK, Dan W.
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2009
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Online Access:https://ink.library.smu.edu.sg/sol_research/4004
https://ink.library.smu.edu.sg/context/sol_research/article/5962/viewcontent/SSRN_id2256478.pdf
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spelling sg-smu-ink.sol_research-59622022-11-03T06:10:54Z The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers PUCHNIAK, Dan W. It is widely assumed that hostile takeovers are a prerequisite for an efficient system of corporate governance. This assumption is false. Since the new millennium, Japan has transformed itself from being on the brink of one of the largest economic meltdowns in modern economic history to currently being in the midst of its longest period of postwar economic expansion (2002-2007). This astounding recovery was achieved without a single successful hostile takeover of a major Japanese company. True to its postwar tradition, corporate Japan has successfully restructured through government intervention, bank-driven reallocation of capital, and orchestrated and friendly mergers — the antitheses of the American corporate governance model, which is premised on hostile takeovers. The conspicuous absence of hostile takeovers in Japan’s recent recovery is particularly remarkable considering that, during the recent recovery, market conditions for hostile takeovers were close to optimal. Almost all of Japan’s “idiosyncratic barriers” to hostile takeovers (i.e., stable shareholdings, a cultural aversion to hostile takeovers, and inefficient takeover laws) were ostensibly dismantled, and the bust-up values of a substantial percentage of Japan’s listed companies were considerably more than their cumulative stock price. To many experts, Japan appeared to be a utopia for hostile takeovers. Yet despite the pro-hostile takeover environment, there has never been a successful hostile takeover bid during Japan’s period of economic recovery. Japan’s unique system of corporate governance — lifetime employment and the influence of the government and banks — has fostered orchestrated and friendly (but not hostile) M&A as a significant force for restructuring. This is important because it provides evidence of “the efficiency of friendliness” in the era of globalization. Other countries can once again look to Japan’s unique system of corporate governance as a viable alternative to the American corporate governance model based on hostile takeovers. 2009-03-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/sol_research/4004 https://ink.library.smu.edu.sg/context/sol_research/article/5962/viewcontent/SSRN_id2256478.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Yong Pung How School Of Law eng Institutional Knowledge at Singapore Management University Hostile Takeovers Comparative Corporate Law Comparative Corporate Governance Japanese Law Corporate Law Corporate Governance Law and Economics Asian Studies Business Organizations Law Comparative and Foreign Law
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Hostile Takeovers
Comparative Corporate Law
Comparative Corporate Governance
Japanese Law
Corporate Law
Corporate Governance
Law and Economics
Asian Studies
Business Organizations Law
Comparative and Foreign Law
spellingShingle Hostile Takeovers
Comparative Corporate Law
Comparative Corporate Governance
Japanese Law
Corporate Law
Corporate Governance
Law and Economics
Asian Studies
Business Organizations Law
Comparative and Foreign Law
PUCHNIAK, Dan W.
The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers
description It is widely assumed that hostile takeovers are a prerequisite for an efficient system of corporate governance. This assumption is false. Since the new millennium, Japan has transformed itself from being on the brink of one of the largest economic meltdowns in modern economic history to currently being in the midst of its longest period of postwar economic expansion (2002-2007). This astounding recovery was achieved without a single successful hostile takeover of a major Japanese company. True to its postwar tradition, corporate Japan has successfully restructured through government intervention, bank-driven reallocation of capital, and orchestrated and friendly mergers — the antitheses of the American corporate governance model, which is premised on hostile takeovers. The conspicuous absence of hostile takeovers in Japan’s recent recovery is particularly remarkable considering that, during the recent recovery, market conditions for hostile takeovers were close to optimal. Almost all of Japan’s “idiosyncratic barriers” to hostile takeovers (i.e., stable shareholdings, a cultural aversion to hostile takeovers, and inefficient takeover laws) were ostensibly dismantled, and the bust-up values of a substantial percentage of Japan’s listed companies were considerably more than their cumulative stock price. To many experts, Japan appeared to be a utopia for hostile takeovers. Yet despite the pro-hostile takeover environment, there has never been a successful hostile takeover bid during Japan’s period of economic recovery. Japan’s unique system of corporate governance — lifetime employment and the influence of the government and banks — has fostered orchestrated and friendly (but not hostile) M&A as a significant force for restructuring. This is important because it provides evidence of “the efficiency of friendliness” in the era of globalization. Other countries can once again look to Japan’s unique system of corporate governance as a viable alternative to the American corporate governance model based on hostile takeovers.
format text
author PUCHNIAK, Dan W.
author_facet PUCHNIAK, Dan W.
author_sort PUCHNIAK, Dan W.
title The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers
title_short The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers
title_full The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers
title_fullStr The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers
title_full_unstemmed The efficiency of friendliness: Japanese corporate governance succeeds again without hostile takeovers
title_sort efficiency of friendliness: japanese corporate governance succeeds again without hostile takeovers
publisher Institutional Knowledge at Singapore Management University
publishDate 2009
url https://ink.library.smu.edu.sg/sol_research/4004
https://ink.library.smu.edu.sg/context/sol_research/article/5962/viewcontent/SSRN_id2256478.pdf
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