Dooley, Geread --- "Streamlining the Market for Corporate Control: A Takeovers Panel for Japan?" [2008] ELECD 387; in Nottage, Luke; Wolff, Leon; Anderson, Kent (eds), "Corporate Governance in the 21st Century" (Edward Elgar Publishing, 2008)

Book Title: Corporate Governance in the 21st Century

Editor(s): Nottage, Luke; Wolff, Leon; Anderson, Kent

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847209238

Section: Chapter 7

Section Title: Streamlining the Market for Corporate Control: A Takeovers Panel for Japan?

Author(s): Dooley, Geread

Number of pages: 23

Extract:

7. Streamlining the market for corporate
control: a takeovers panel for Japan?
Geread Dooley
Japan Inc. has been shaken, its foundations jolted. The person primarily
responsible is Takafumi Horie. In 1996 Horie dropped out of Japan's presti-
gious University of Tokyo and founded Livin' on the Edge, a website design
consultancy company, with just US$52 000. Employing an unheralded merg-
ers and acquisitions (M&A) strategy the brash entrepreneur engineered the
purchase of more than 50 companies. Such raw capitalism and entrepreneur-
ial vitality has rarely been seen in post-war Japan. By December 2005 the
company, now known as `Livedoor', had a market value of US$7 billion
(based on annual sales of just US$661 million for 2005). Horie had acquired
celebrity status. Spurred on by Horie's aggressive manoeuvres and abrupt
success, the unthinkable has occurred: takeover activity is on the rise in Japan
­ a country famous for the illiquidity of its stock exchange and tightly held
companies.
Unintended consequences have occurred. Japanese corporate conventions
such as relationship-based business decisions and the veneration of organic
growth have been challenged. Corporate Japan, some say intent on preserving
the status quo, has used Horie's challenge as a pretext for implementing
management-preserving corporate rules, including versions of the notorious
US-style `poison pill' defences (Milhaupt, 2005a, p. 2171). The poison pill
defence ­ especially in the Anglo-Commonwealth tradition ­ is often regarded
as a pro-management device capable of locking-in insular boards, prone to
inhibit ...