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Choice as Regulatory Reform: The Case of Japanese Corporate Governance

48 Pages Posted: 3 May 2004  

Ronald J. Gilson

Stanford Law School; Columbia Law School; European Corporate Governance Institute (ECGI)

Curtis J. Milhaupt

Columbia Law School

Date Written: April 2004

Abstract

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.

JEL Classification: K22, L22

Suggested Citation

Gilson, Ronald J. and Milhaupt, Curtis J., Choice as Regulatory Reform: The Case of Japanese Corporate Governance (April 2004). ECGI - Law Working Paper No. 22/2004; Columbia Law and Economics Working Paper No. 251; Stanford Law and Economics Olin Working Paper No. 282. Available at SSRN: https://ssrn.com/abstract=537843 or http://dx.doi.org/10.2139/ssrn.537843

Ronald J. Gilson

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
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Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
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212-854-1655 (Phone)
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European Corporate Governance Institute (ECGI)

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

Curtis J. Milhaupt (Contact Author)

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States
(212) 854-4926 (Phone)
(212) 854-7496 (Fax)

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