Contracts, Markets, and Laws in the US and Japan
Edited by Zenichi Shishido
Comments on Part III: the diversification of corporate governance arrangements: ownership structure and the board of directors
Part III of this book addresses several critical issues, ranging from corporate ownership and the board of directors to the rule related to takeover defenses. As for the rule of takeover defenses, Sekiguchi and Iida (Chapter 12) explore whether the current appraisal remedy available under the Companies Act is an appropriate method for regulating the conflicts that arise in the context of mergers. This topic is extremely important because the conflicts of interest between directors (controlling shareholders) and minority shareholders continue to grow more serious, as the number of management buyouts (MBOs) and acquisitions by parent (controlling) firms of their listed subsidiaries have increased. Hoshi (Chapter 13) examines whether the Japanese legislature should allow for injunctions against corporate takeovers through analyzing a simple model. The key factor of his insightful analysis is the uncertainty that exists in judicial valuation of corporate takeover activities, which may influence the effectiveness of the appraisal system and the injunction system. The rest of this chapter focuses on issues related to ownership and the board of directors. Since I have examined the evolution of corporate governance arrangements in Japan over the past decades, I would like to highlight several background facts and compiled recent empirical results on the topics at hand. The following should help facilitate understanding of the contributions made in each chapter and hopefully inspire further research.
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