Book Review: Hedge Fund Activism in Japan

hedge_fund_activism_in_japanJohn Buchanan, Dominic Heesang Chai, and Simon Deakin: Hedge Fund Activism in Japan: The Limits of Shareholder Primacy. New York: Cambridge University Press, 2012. 377 pp. $99.00, hardcover.

Read the review by Hitoshi Mitsuhashi of the Department of Business and Commerce at Keio University, published in Administrative Science Quarterly:

This book documents the rapid rise, temporary success, and eventual failure of publicly confrontational hedge fund activism in Japan and investigates why Japanese corporations’ reactions to the emergence of hedge funds differ from those of corporations in the U.S. and U.K., regardless of the high degree of commonality in their legal environments concerning corporate governance. 55697_ASQ_v58n2_72ppiRGB_150pixWAccording to the authors, the growth of confrontational hedge funds in the late 1990s in markets in the U.S. and U.K. rested on the shareholder primacy model of corporate governance, in which increased shareholder value was widely accepted as the primary objective of corporate activities. In this model, senior managers need to serve the interests of all shareholders and are expected to increase dividends and buy back stocks to return their reserves to the ultimate owners, the shareholders. In contrast, operating in legal environments similar to those of the U.S. and U.K., Japanese corporations follow the community firm model, in which corporations are considered more than a collection of tradable securities and are expected to serve various interests of community members, including but not limited to employees, commercial banks, cross- shareholding partners, distributors, and corporate customers. In this model, senior managers and boards need to pay more attention to internal stake- holders than to shareholders and to prioritize the economic security of their corporations’ business and long-term organizational survival over financial interests and value.

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About Cynthia Nalevanko, Editor, Management INK

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 900 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, and Washington DC, our publishing programme includes more than 560 journals and over 800 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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