Koito Manufacturing Essay

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MSc in Corporate Finance: Advanced Corporate Finance Denys La Tour Xinyi Pei Paul Michel Jean-Cyril Vaissié Alice Lamberton Professor: Florencio Lopez de Silanes Molina 2/7/2012 Denys La Tour Xinyi Pei Paul Michel Jean-Cyril Vaissié Alice Lamberton AGENDA: Case overview | Japanese corporate governance vs U.S. corporate governance | Foreign investors motivations and shareholders rights in the law | Shareholders rights and dividends policy | Self-dealing and organization in Keiretsu and shareholders control of the accounts | Take over of Koito, implication (about its activities with Toyota) and large shareholders in corporate governance | What really happened | 1 2/7/2012 CASE OVERVIEW: CASE OVERVIEW: Pickens bought 20.2% of the Koito shares (undisclosed seller and amount) The board refused an increase of dividends, but accpeted it after Koito rejected the demand of Pickens to review the accounts. Pickens and Koito launched publicity campaigns against each other. Sep 20 Mar 9 Jun 27 Mar 30 1989 1990 Jan 15 Mr Watanabe, tried to oblige Toyota to buyback his Koito shares. Toyota did not oblige. Hence, Mr Watanabe opened discussion with Mr. Pickens from the U.S. Source: Case During the annual meeting, the Koito’s board of directors declined board representation for Pickens Pickens asked an access on Koito’s books and filed lawsuits against Koito for dumping practices that benefited Toyota Pickens announced his plan to increase his stake to 30% 2 2/7/2012 KEIRETSU: DEFINITION: | Group of large Japanese financial industrial corporations through historical associations and cross-shareholdings In a keiretsu each firm maintains its operational independence while retaining very close commercial relationships with other firms in the group. Horizontal keiretsus (such as Mitubishi Corp. and

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