[go: up one dir, main page]

IDEAS home Printed from https://ideas.repec.org/p/eti/rdpsjp/21036.html
   My bibliography  Save this paper

Motivations and Effects of Engagement by Institutional Investors (Japanese)

Author

Listed:
  • HIDAKA Wataru
  • IKEDA Naoshi
  • INOUE Kotaro
Abstract
This paper examines the motivations and the effects of the engagement activities by institutional investors in Japan by directly observing the private engagement activities of three large institutional investors. Taking advantage of the timing of the significant changes in the costs and benefits of engagement activities for institutional investors resulting from the revised Stewardship Code of 2017 which strongly promoted responsible monitoring by both asset managers and asset owners in Japan, we analyze a total of more than three thousand private engagements by large institutional investors in the period from 2017 to 2019. The main results are that each institutional investor engages with companies in which it has a high shareholding ratio and where the governance of the companies is poor. We show that the engagement activities increase the ratio of outside independent directors and the ratio of executive shareholdings, while they decrease the ratio of non-investment purpose shareholdings and abolish takeover defense measures of the target companies, indicating an improvement in governance of the target firms. In addition, we observed an increase in ROE and Tobin's Q at the target companies in the post-engagement period. These results indicate that engagement by institutional investors targets companies with poor governance and improves the governance and financial performance of the targeted companies.

Suggested Citation

  • HIDAKA Wataru & IKEDA Naoshi & INOUE Kotaro, 2021. "Motivations and Effects of Engagement by Institutional Investors (Japanese)," Discussion Papers (Japanese) 21036, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:rdpsjp:21036
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/21j036.pdf
    Download Restriction: no
    ---><---

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:rdpsjp:21036. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.