Abstract
The Japanese corporate governance system underwent drastic changes since the last two or three decades. Prior to the country’s financial meltdown in the 1980s, Japan’s corporate governance model was praised by many as a model worthy of imitation around the world. The admirers argued that the model provides close sharing of information between the firms and their shareholders, inter-firm cooperation, and employment stability. Such a perception has changed for at least two main reasons: (i) a string of corporate scandals — from the sales of tainted milk by Snow Brand, the hiding of product liability claims by Mitsubishi Motors, the cover up of massive stock trading losses at Daiwa Bank, and (ii) the participation of foreign investors in the Japanese stock market. Japan corporate governance is still navigating between the keiretsu type1and the market-based model. That is because Japan’s economy still bears the traces of the ‘zaibatsu’, a group of family-run businesses that emerged as early as the s century. Japanese firms were traditionally financed by big banks, which perform as supervisory boards to the managing team. Recently, Japanese firms are adopting some controversial corporate governance practices long associated with the US, such as the stock options portion of the executive remuneration, small sized boards, and independent directors. Despite the publicity orchestrated with these new elements, the reality on the ground is different. The Japanese corporate governance structure remains close to the continental European style rather than the US. That is because Japanese corporations are still either owned by big families or financed by big banks.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
Notes
Kereitsu refers to closely-linked business groups or interlocking directorships.
Towers Perrin, a Stamford (Conn.) human resources firm.
For non-public companies, there is no shareholding ownership timing.
John Armour, Jack B. Jacobs, Curtis, J. Milhaupt, ‘The Evolution of Hostile Takeover Regimes in Developed and Emerging Markets: An Analytical Framework’, Harvard International Law Review, 52, 2011: 255.
Kenichi Osugi, ‘What is Converging? Rules on Hostile Takeovers in Japan and the Convergence Debate’, Asian-Pacific Law & Policy Journal, 9, Issue 1, 2007.
Casper Lawson, Hiroya Yamazaki, Paul McNicholl (2007): Steel Partners v. Bull-Dog Sauce: Analysis, Linklaters.
Article 109 of the Company Law states: ‘A Stock Company shall treat its shareholders equally in accordance with the features and number of shares they hold.’
See note 5 at p. 161.
Copyright information
© 2014 Felix I. Lessambo
About this chapter
Cite this chapter
Lessambo, F.I. (2014). Corporate Governance in Japan. In: The International Corporate Governance System. Global Financial Markets series. Palgrave Macmillan, London. https://doi.org/10.1057/9781137360014_9
Download citation
DOI: https://doi.org/10.1057/9781137360014_9
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-47178-2
Online ISBN: 978-1-137-36001-4
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)