The main problem with japanese equities

Although government debt in Japan is of a concern. Also the demographic situation is worryingsome, but to a much lesser extent (bring in your exellently educated women into the workforce Japan!). The main thing troubling me with japanese equities is the corporate governance situation.

In mid 2005 american and english activists started raiding Japan. It failed miserably and most of the corporate raiders left Japan with a bleeding nose. In my opinion they did make mistakes and underestimated cultural pecularities in corporate japan. In the end I think activism has to come from within Japan and not from outside. Olympus could have been the chance for corporate japan to show the world its willingness to change, but it looks like corporate japan is still scretching its backs.

For those interested in this subject I recommend reading the following papers.

http://viewswire.eiu.com/report_dl.asp?mode=fi&fi=1173533702.PDF

http://finance.wharton.upenn.edu/~allenf/download/Vita/Japan-Corporate-Governance.pdf

http://www.itec.doshisha-u.jp/03_publication/03_policy/08-01-Deakin-itecpb.pdf

Also Prof. Simon Deakin from the Doshisha business school has some interesting points about problems activist hedge funds facing in Japan.

I also have had my encounter with corporate governance issues in Japan already and very likely the next individual company I'm going to present will be that company.