Institutional Shareholder Engagement with Japanese Firms

This paper explores how shareholder engagement on environmental, social and governance (ESG) issues is informally exercised by a large global institutional investor with locally embedded, geographically remote firms. By studying a UK asset manager’s shareholder engagement strategies on ESG issues toward Japanese firms, we document three findings. First, it is found that main target firms of engagement activities are large firms with global operations, and that corporate governance issues are the most important engagement topic in Japan. Second, in trying to effectively exercise voice across societies, engagement activities are conducted with geographically remote target firms on various ESG agendas through a self-enforcing, face-to-face, and sometimes collective manner. Finally, this study argues the gap between the asset manager’s motivation to engage and local target firms’ readiness to respond due to corporate organisational and language issues.

Keywords: Shareholder engagement, ESG, corporate governance

JEL Classification: G15, G23, G34

Suggested Citation: Suggested Citation

Clark, Gordon L. and McGill, Sarah M and McGill, Sarah M and Saito, Yukie and Viehs, Michael, Institutional Shareholder Engagement with Japanese Firms (June 17, 2015). Available at SSRN: https://ssrn.com/abstract=2619616 or http://dx.doi.org/10.2139/ssrn.2619616