Agency Theory in Practice: A Qualitative Study of Hedge Fund Activism in Japan

43 Pages Posted: 14 Feb 2014 Last revised: 21 Feb 2014

See all articles by John Buchanan

John Buchanan

University of Cambridge - Centre for Business Research (CBR)

Dominic Heesang Chai

University of Manchester - Manchester Business School; University of Cambridge - Centre for Business Research (CBR)

Simon Deakin

University of Cambridge - Centre for Business Research (CBR); European Corporate Governance Institute (ECGI); University of Cambridge - Faculty of Law

Multiple version iconThere are 2 versions of this paper

Date Written: February 2013

Abstract

We look at the reaction to hedge fund activism of managers and shareholders in Japanese firms and explore the implications of our findings for agency theory. We use a qualitative research design which treats the standard agency-theoretical model of the firm as only one possible approach to understanding corporate governance, to be tested through empirical research, rather than as an assumption built into the analysis. We find that Japanese managers do not generally regard themselves as the shareholders’ agents and that, conversely, shareholders in Japanese firms do not generally behave as principals. Our findings suggest that the standard principal-agent model may be a weak fit for firms in certain national contexts.

Keywords: Corporate Governance, Agency Theory, Japan, Hedge Funds, Shareholder Activism

JEL Classification: G34, K22

Suggested Citation

Buchanan, John and Chai, Dominic H. and Deakin, Simon F., Agency Theory in Practice: A Qualitative Study of Hedge Fund Activism in Japan (February 2013). European Corporate Governance Institute (ECGI) - Law Working Paper No. 237/2014; University of Cambridge Faculty of Law Research Paper No. 14/2014. Available at SSRN: https://ssrn.com/abstract=2394698 or http://dx.doi.org/10.2139/ssrn.2394698

John Buchanan

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Dominic H. Chai

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom

Simon F. Deakin (Contact Author)

University of Cambridge - Centre for Business Research (CBR) ( email )

Top Floor, Judge Business School Building
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+ 44 1223 335243 (Phone)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

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