A top Toshiba executive once wrote in an email that he would ask government officials to “beat up” a hedge fund. The demand, reported in a shareholder-commissioned independent probe, illustrates why shareholder activism rarely succeeds in Japan.

The 147-page report details a long, drawn-out battle between the Japanese tech group and foreign shareholders, including Harvard University’s endowment fund and Singapore-based Effissimo. It concludes that Toshiba colluded with the government to thwart overseas investors. Toshiba says it will review the report.

Toshiba’s shareholders are not the only ones to have struggled against Japanese company management. Most fights end up as costly losing battles. Shareholder campaigns have won approval just four times in local corporate history.

Foreign investors get the cold shoulder in other ways too. Last May, Tokyo tightened restrictions on overseas shareholders. They must now receive government approval before buying a stake of 1 per cent or more in hundreds of local stocks, including Toyota and SoftBank. How the list and its exemptions were selected lacks transparency.

Yet foreign buyers should get credit for Japan’s recent stock market rally, which has pushed Toshiba’s share price up 43 per cent in the past year. This has reversed years of flagging interest. Foreign investors sold a net $130bn worth of local equities in the five years to 2019 as hopes pinned to the success of Abenomics wore off.

Now Japan risks pushing them away. Foreign investors make up about 30 per cent of the local market. This comes as the domestic investor pool ages. Individuals aged 65 or older own half of money held in local personal financial assets. This demographic group has long preferred bank savings to equities.

Many Japanese stocks already trade at a discount to global peers — marked down for weak governance, complicated crossholdings and historically low shareholder returns. The report into Toshiba may widen that discount.

Our popular newsletter for premium subscribers Best of Lex is published twice-weekly. Please sign up here