Foreign Shareholders and Corporate Governance in Japan

21 Pages Posted: 27 Mar 2019

See all articles by Hidefusa Iida

Hidefusa Iida

University of Tokyo - Faculty of Law

Date Written: March 5, 2019


Shareholders are one of the most critical players in corporate governance. Contrary to the stereotypical understanding of Japanese companies, widely held equity ownership and foreign investors constituting the largest investor category are commonly observed in large Japanese companies. Given this shareholding structure, foreign shareholders have a potentially significant influence on corporate governance in Japan; however, their role has rarely been analyzed from the perspective of corporate law. This paper argues that the current legal environment is at the halfway point in its attempt to get the most out of their potential influence. The aggressive shareholder activism by foreign investors has faced the skeptical attitude of not only the target company’s management, but also the government and the courts. Although the recent reform in corporate governance led by the government is bringing about a change in the business environment, it is too early to conclude that it will eliminate the resistance against shareholders’ activism. This paper argues that the law should prepare the environment to support mild shareholder engagement by relatively passive investors, such as those encouraging the collaboration among institutional investors.

Keywords: corporate governance, shareholder activism, international investment

JEL Classification: K22, G34, G38

Suggested Citation

Iida, Hidefusa, Foreign Shareholders and Corporate Governance in Japan (March 5, 2019). Available at SSRN: or

Hidefusa Iida (Contact Author)

University of Tokyo - Faculty of Law ( email )

7-3-1 Hongo Bunkyo-Ku
Tokyo, 113

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