Choice as Regulatory Reform: The Case of Japanese Corporate Governance
Ronald J. Gilson
Stanford Law School; Columbia Law School; European Corporate Governance Institute (ECGI)
Curtis J. Milhaupt
Columbia Law School
ECGI - Law Working Paper No. 22/2004; Columbia Law and Economics Working Paper No. 251; Stanford Law and Economics Olin Working Paper No. 282
The fact of a small number of hostile takeover bids in Japan the recent past, together with technical amendments of the Civil Code that would allow a poison pill-like security, raises the question of how a poison pill would operate in Japan should it be widely deployed. This paper reviews the U.S. experience with the pill to the end of identifying what institutions operated to prevent the poison pill from fully enabling the target board to block a hostile takeover. It then considers whether similar ameliorating institutions are available in Japan, and concludes that with the exception of the court system, Japan lacks the range institutions that proved to be effective in the United States. As a result, the Japanese courts will have a heavy responsibility in framing limits on the use of poison pills.
Number of Pages in PDF File: 48
JEL Classification: K22, L22
Date posted: May 3, 2004
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