MUFG Asset Management: Japan Open to Activist Investors

• Behind the rise in investor activism in Japan is the change in corporate attitudes in favor of shareholder interests, which has increased the likelihood of activist proposals being accepted. Investor activism should increase further, given increasing support from institutional investors, prominent calls for more focused business strategies such as business portfolio revisions, and a rise in M&A activity by business corporations.
• Investment returns tend to rise over the long term when companies acquiesce to proposals made by activists. Activism can be viewed as a catalyst for promoting corporate management reform, and investors in the Japanese equity markets will need to carefully scrutinize the content of activist demands and the intentions behind managements’ responses.

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