Common Ownership: The Paradox in Japan's Corporate Governance

Steven Van Uytsel

Chapter 13 in Research Handbook on Competition and Corporate Law, 2025, pp 251-270 from Edward Elgar Publishing

Abstract: This chapter argues that Japan's corporate governance may be experiencing a paradox. This paradox relates to the transformation of Japan's corporate governance from the keiretsu system, whereby groups of non-competing firms were formed through cross-holding shares in each other, to a model based on the presence of institutional investors. This shift was considered necessary to encourage more competitive strategies by freeing Japanese managers from acting in the interests of the cross-shareholders. Emerging scholarship is, however, holding that a similar outcome may be reached if several institutional investors hold a substantial but not necessarily controlling stake in competing firms. This so-called common ownership is gradually developing in Japan. Even though some of the characteristics linked to the negative connotations of common ownership are also emerging in Japan, further empirical research is required to definitively determine whether the paradox has emerged.

Keywords: Keiretsu; Cross-Shareholding; Common Ownership; Japanese Antimonopoly Act; Bank of Japan; Institutional Investors (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803920542
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