Studying corporate control in Japan is like landing in the middle of a murder mystery. There is indisputably a corpse: in this case, the takeover protection once provided by long-term shareholders was killed between 1996 and 2005, as shown in Chapter 2. How the corpse died and especially what threat the killer poses to other institutions of the Japanese political economy are hotly contested questions. Some adduce the collapse of cross-shareholdings as a sign of the thoroughgoing liberalization of the market for corporate control, in which western institutional investors now call many of the shots in Japanese companies. Others claim, contrariwise, that the limited number of takeovers to date is proof positive that the Japanese market for corporate control remains closed even without cross-shareholding, and that entrenched managers can protect themselves from any unwanted advances. A third group of scholars sees a new organizational diversity in Japan: some firms play by the rules of an active market for corporate control, while others have tried to rebuild interfirm alliances as a form of protection. As this book goes to press, it is not entirely clear how active the market for Japanese corporate control is in international comparison. While hostile takeovers have rarely succeeded in recent years in Japan, the increasing number of attempted takeovers suggests that the character of market monitoring of managers is higher than it was before the death of the cross-shareholding regime.

What is much clearer is that the governance of Japanese takeovers has shifted away from the informal arena of stable shareholding to the formal institutional arena of courts. It is in this formal venue that the future of the Japanese market for corporate control will be determined. This is a significant institutional change. How it happened is the subject of this chapter.