Chilled to the Pill: The Japanese Judiciary’s Cool Reception of the Poison Pill and Potential Repercussions

Abstract

While the 1990s is frequently referred to as Japan’s “lost decade” because of the nation’s economic underperformance and weak structures for corporate governance, the past few years have shown a business environment that is in the midst of significant transition. Most importantly, Japan is experiencing a boom in mergers and acquisitions (M&A), with the first half of 2005 alone accounting for an aggregate value of $108.9 billion in Japanese M&A transactions (greater than the $108.5 billion of deal value accumulated in all of 2004). Among the major factors contributing to this trend are the improved cash positions of many companies, a record level of foreign share ownership that has helped strengthen shareholder activism, and, perhaps most significantly, the gradual unwinding of stable cross-shareholding relationships that were previously a staple of Japanese corporate strategy and stability.