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Farmers fertilize their plots of land and sequentially rotate the crops they plant on them. They do this to improve soil health, optimize nutrients in the soil, and combat pest and weed pressures. Investors should take a cue, to improve the quality of the “land” from which they grow profits, – in other words, the […]
Boards are responsible and held accountable for the decisions they are making. Hence, the quality of the decision-making process and the decisions themselves are fundamental to the work of boards, their organizations, and the investors. When board members are too polite with each other, they don’t have so-called healthy debates. Why do these debates improve the quality of decisions? Because they invite board members to share their professional opinions.
On February 9th, still in the midst of the pandemic, BDTI held its English Director Boot Camp via Zoom. The day-long intensive course was attended by 10 highly-experienced and very interactive participants. The participants heard lectures about corporate governance by Nicholas Benes along with a guest lecture by Andrew Silberman of AMT, and exchanged experiences […]
On February 9th, still in the midst of the pandemic, BDTI held its English Director Boot Camp via teleconference. The day-long intensive course was attended by 10 highly-experienced and highly interactive participants. The participants heard lectures about corporate governance by Nicholas Benes along with a guest lecture by Andrew Silberman of AMT, and exchanged experiences and opinions. Even during a pandemic, training continued smoothly, with all participants chiming in with insightful comments and questions.
We are planning to hold the next course via teleconference on Wednesday, April 7th, 2021. Sign up early! Please see a description of our director training course here or click the button below for further information.
The next Boot Camp this year will be on Wednesday, December 2, 2020. Course will be on ZOOM, so anyone in the world can join. Few seats remaining, so make sure to sign up now!
This one-day intensive program teaches participants key legal and corporate governance knowledge they need to responsibly serve on, report to, or analyze boards of Japanese companies, both public and private. The course consists of short lectures interspersed with time for interactive discussion and Q&A about real-life situations that occur on boards, and how to handle them. The course is usually good fun for everybody, since we learn from each others’ experiences, as well as from BDTI. The course covers topics such as:
“Earlier this summer, the Corporate Counselor covered amendments to Japan’s foreign direct investment laws that lowered the government approval threshold from 10% to a mere 1% for share acquisitions of publicly-traded companies that engage in a wide range of business activities deemed critical to Japan’s national security, unless an exemption applies. Attached for ease of reference is our June newsletter, which has been updated.
Our June newsletter specifically left for another day a discussion of the shareholder rights ramifications arising from the amendments to Japan’s foreign direct investment laws. This edition of the Corporate Counselor bridges this important gap.
The impact on shareholder rights arising from the amendments to Japan’s foreign direct investment laws is a game change for investments into Japan. The Japanese government now has veto rights over fundamental corporate governance rights throughout the investment cycle. The amendments apply retroactively, so overseas investors may no longer be able to effectively control their existing investments in Japan.”
“In all three transactions, minority shareholders face a decision. Either accept the offered price or resist, by refusing to tender their shares or petitioning a Japanese court to review the price. The most significant question facing Japanese corporate governance today is whether Japanese courts will intervene and backstop special committees and boards of directors that are not doing their jobs.”
“Corporate purpose is now the focus of a fundamental and heated debate, with rapidly growing support for the proposition that corporations should move from shareholder value maximization to “stakeholder governance” and “stakeholder capitalism.” This Article critically examines the increasingly influential “stakeholderism” view, according to which corporate leaders should give weight not only to the interests of shareholders but also to those of all other corporate constituencies (including employees, customers, suppliers, and the environment). We conduct a conceptual, economic, and empirical analysis of stakeholderism and its expected consequences. We conclude that this view should be rejected, including by those who care deeply about the welfare of stakeholders.
Stakeholderism, we demonstrate, would not benefit stakeholders as its supporters claim. To examine the expected consequences of stakeholderism, we analyze the incentives of corporate leaders, empirically investigate whether they have in the past used their discretion to protect stakeholders, and examine whether recent commitments to adopt stakeholderism can be expected to bring about a meaningful change. Our analysis concludes that acceptance of stakeholderism should not be expected to make stakeholders better off.
Furthermore, we show that embracing stakeholderism could well impose substantial costs on shareholders, stakeholders, and society at large. Stakeholderism would increase the insulation of corporate leaders from shareholders, reduce their accountability, and hurt economic performance. In addition, by raising illusory hopes that corporate leaders would on their own provide substantial protection to stakeholders, stakeholderism would impede or delay reforms that could bring meaningful protection to stakeholders. Stakeholderism would therefore be contrary to the interests of the stakeholders it purports to serve and should be opposed by those who take stakeholder interests seriously…”
“At the center of a fundamental and heated debate about the purpose that corporations should serve, an increasingly influential “stakeholderism” view advocates giving corporate leaders the discretionary power to serve all stakeholders and not just shareholders. Supporters of stakeholderism argue that it would address growing concerns about the impact of corporations on society and the environment. By contrast, critics of stakeholderism object that corporate leaders should not be expected to use expanded discretion to benefit stakeholders. This Article puts forward novel empirical evidence that can contribute to resolving this key debate.
During the hostile takeovers era, stakeholderist arguments contributed to the adoption of constituency statutes by more than thirty states. These statutes authorize corporate leaders to give weight to stakeholder interests in considering a sale of their company. We study how corporate leaders in fact used the power awarded to them by these statutes in the past two decades. In particular, using hand-collected data, we analyze in detail over one hundred cases governed by constituency statutes in which corporate leaders negotiated a sale of their company to a private equity buyer.
We find that corporate leaders have used their bargaining power to obtain gains for shareholders, executives, and directors. However, despite the risks that private equity acquisitions posed for stakeholders, corporate leaders made very little use of their power to negotiate for stakeholder protections. Furthermore, in the cases in which some such provisions were included, they were largely practically inconsequential or cosmetic. We conclude that constituency statutes failed to deliver the benefits to stakeholders that they were supposed to produce.
Beyond their implications for the long-standing debate on constituency statutes, our findings also provide important lessons for the ongoing major debate on stakeholderism. At a minimum, stakeholderists should identify the causes for the failure of constituency statutes and examine whether adoption of their proposals would not suffer from a similar fate. After examining several possible explanations for the failure of constituency statutes, we conclude that the most plausible explanation is that corporate leaders have incentives not to protect stakeholders beyond what would serve shareholder value. Therefore, we argue, the evidence we put together indicates that stakeholderism should be expected to fail to deliver, as constituency statutes did: on the basis of the currently available evidence, stakeholderism should not be supported, even by those who deeply care about stakeholders.”
“We are faced with a time of great change, as exemplified by the development of digital transformation (DX), changes in the socioeconomic structure, an increasing sense of crisis regarding global environmental issues, and changes in people’s mindsets. To seize these changes as an opportunity to achieve medium- to longterm economic growth and build a sustainable, human-centered society, the realization of “Society 5.0 for SDGs”—a concept originating in Japan—holds the key. Therefore, we conducted joint research toward the realization of Society 5.0 for SDGs with three parties representing the Japanese business community, academia, and investors, namely Keidanren, the University of Tokyo, and the GPIF. In the joint research, a series of discussions have been held with the shared recognition of the importance of stable medium- to long-term funding for companies, universities, and start-ups promoting problem-solving innovation for the realization of Society 5.0 for SDGs.
Accordingly, we have set an aim of realizing Society 5.0 and achieving SDGs by identifying the trend of now globally expanding ESG investment, further evolving it, and connecting it to the promotion of investment in problemsolving innovation. We then examined measures to achieve the aim. Specifically, we established four themes to promote investment in problem-solving innovation, and conducted research on specific initiatives of each player. At the end, through these discussions, we present a future action plan of the three parties for the realization of “Society 5.0 for SDGs.”