Issues in Japanese Corporate Governance

다국어 초록 (Multilingual Abstract)

This paper reviews the current state of Japanese corporate governance and takes a look at the potential changes expected in the future.
There have been many changes in the policy and regulatory environment that shapes corporate governance in Japan. The origin of these changes goes back to the first phase of financial liberalisation in the 1980s. The `big bang' financial refoinis initiated in the 1990s are yet to be completed but the changes in the relationship between the Japanese banking sector and the corporate sector have been profound.
A new regime of corporate governance and financing is emerging from this change. Change is piecemeal. It is constrained by the complexity of nested institutions that are resistant and difficult to change. One way of describing the system that is emerging is that it is a hybrid system in which many of the institutional features of the bank-centred insider-oriented system of the postwar corporate governance regime in Japan will remain. But that description undervalues the longer-term impact of the changes. The new system is already more market oriented. The idea that a more market oriented shareholder-based corporate governance system is not compatible with Japanese institutional legacies in Japan does not square with history and the significant part played by stock issuance on the interwar period.
The myriad of changes in the financial system and corporate regulation that have been set in train are leading to new corporate governance arrangements that are much more market- oriented than they were in the past. A key factor in this change is the opening up of the Japanese financial market and the more active role of foreign investors in Japan. More FDI in Japan is one aspect. Another aspect is the increased access of independent and entrepreneurial companies in Japan directly to international fund raising and to global centres of venture capital formation while domestic markets still remain embryonic.
In short, while the process is slow and messy, the trends are clear. The proportion of household assets held in the form of bank deposits will decline and the role of securities investment and trusts will rise. Institutional investors and their role in corporate governance will become more critical. Companies will increase reliance on direct financing in the capital market. The main banks will aim to move to universal banking and smaller banks to carve out niche markets. The role of the banks in corporate governance will further recede and shareholders can be expected to increase their influence. There is a necessary convergence of corporate regulation in the global capital market if not yet of corporate practice. Unique equilibrium is not in the character of dynamic market adjustment in the real world. There will be little difference between the financing activities and corporate practice of major Japanese companies and their North American or European counterparts. Already the shift to a market-oriented system is well under way.

목차 (Table of Contents)

• Ⅰ. Introduction
• Ⅱ. Nature of Corporate Governance
• Ⅲ. Features of Japanese Corporate Organisation
• Ⅳ. The Strengths of Japanese Corporate Governance
• Ⅴ. The Weaknesses in Japanese Corporate Governance
• Ⅵ. Pressures for Change in Japanese Corporate Governance
• Ⅶ. From Insider to Outside Control?
• Ⅷ. Another Issue
• Ⅸ. Concluding Questions
• Ⅹ. Whither Corporate Governance in Japan?

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