“Where is Japan’s Corporate Governance Heading? – The Key is in Refining Hybridization”

The insightful Professor Hideaki Miyajima, Professor at the Faculty of Commerce, Waseda University, has written an article with the above titlein the English Yomiurionline edition, inwhich he summarizesthe results of his recent research. The article is available at:


Here are some excerpts reflecting some of his most important conclusions:

This governancestructure started to become dysfunctional and quickly transformed in 1997, however, when the economic bubble collapsed, triggering the banking crisis.

Now, the questions are: how far the characteristics of Japan’s corporate governance have changed, what kinds of characteristics Japan’s corporate governance has at the moment, where it is headed, and what kinds of reforms would be desirable.

Our research group consists of spirited researchers who have a deep interest in corporate governance in the fields of economics, business administration, financial theory, and corporate law, and who conduct analyses through the formulating of their own unique data sets and the latest economic models. Therefore, Japan’s Corporate Governance mentioned above is certainly not an easy read. However, the demonstration results contain eye-opening and surprising facts as well as firm and factual evidence on viewpoints that have been regarded only as theories until now. The points shown below are but a few examples.

The effectiveness of the monitors of clients of megabanks that have been established through mergers is supported by the possibilities of the withdrawing of the funds of regional banks that participate in joint financing.

It has been pointed out that pressure from the stock market frequently accelerates corporate management in excess, but this has not yet been proven.

There is definitely an interactive correlation between the amount of the stock holding ratio of cross-border institutional investors and corporate performance.

There is a strong tendency of companies that need to adopt outside directors avoiding their adoption, and companies without sufficient reasons to adopt outside directors adopting them.

Japanese companies are now transferring power to individual business organizations (business units, in-house companies, and subsidiaries), but the development of the monitors in the transferring of power, especially to subsidiaries, is insufficient, and this can lead to moral hazards.

Listed subsidiaries are frequently criticized as jeopardizing the interests of minority shareholders, but their performance is by no means poor, and the evidence that deprivation occurs is scarce at best.

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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