One of
the three arrows of Abenomics, the plan by Prime Minister Shinzo Abe to fix
Japan’s economy, was market and business reform. Not surprising, those with the
most to lose are fighting back.
Abe want public companies to give their investors more say in the way
the firms are run. Executives at Japanese companies don’t like that. They saw
what happened in the US when investors were able to make their voices heard.
Executives were held accountable and some were even fired for poor management.
In boardrooms across the nation, managers have shown their reluctance to
buy into the premier’s plans by instituting poison pills, a tool companies use
to stop hostile takeovers. Poison pills typically give stockowners the right to
buy more shares to dilute the holdings of an acquirer.
At least 20% of firms in the benchmark Topix index have instituted
poison pills, compared with 5.8% on Wall Street’s Standard & Poor’s 500
Index, reported
the Japan Times.
“Hostile takeovers in Japan are like plane crashes. They hardly ever
happen,” Takeyuki Ishida, head of Japan research at Institutional Shareholder
Services told the Japan Times. “Yet Japanese corporations are afraid and want
to protect themselves.”
The pills go against the nation’s attempts to make Japanese executives
accountable in the market for their performance, Hiroyuki Nagamatsu, an M&A
adviser at Deloitte Tohmatsu Financial Advisory in Tokyo, told the Japan Times.
“Adding these pills doesn’t go down well with investors.”
Since June, firms are also required to justify the economic rationale
for keeping cross-shareholdings, another protection against takeovers.
Poison pills “serve to protect lower-quality
companies,” Tatsushi Maeno, head of Japanese equities at Pinebridge Investments
Japan in Tokyo told the paper. By Asia Unhedged
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