Corporate Governance And Corporate Behavior In Japan: The Consequences Of Stock Options And Corporate Diversification (springerbriefs In Economics)
by Masaharu Hanazaki /
2016 / English / PDF
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This book carefully examines the effects of changes in the
corporate governance structure on corporate behavior or company
performance, using micro-data from listed companies in Japan. The
author found that in Japan the introduction of stock options had
neither a positive impact on profitability nor the negative side
effects of promoting risk-taking behaviors. Furthermore, he found
that corporate diversification and division of corporations showed
negative impacts on profitability.
This book carefully examines the effects of changes in the
corporate governance structure on corporate behavior or company
performance, using micro-data from listed companies in Japan. The
author found that in Japan the introduction of stock options had
neither a positive impact on profitability nor the negative side
effects of promoting risk-taking behaviors. Furthermore, he found
that corporate diversification and division of corporations showed
negative impacts on profitability.
The corporate governance structure of Japan has exhibited a large
change from the second half of the 1990s to the present. There
have been institutional reforms involving enterprise law, such as
the introduction of stock options and the removal of the ban on
holding companies. With respect to the ownership structure of a
company, discernible trends are that the equity holdings of
financial institutions and business corporations have fallen
while the presence of foreign stockholders has risen. These
trends are often pointed out as signs that the Japanese corporate
governance structure has been approaching the American model and
that this will energize Japanese firms.
The corporate governance structure of Japan has exhibited a large
change from the second half of the 1990s to the present. There
have been institutional reforms involving enterprise law, such as
the introduction of stock options and the removal of the ban on
holding companies. With respect to the ownership structure of a
company, discernible trends are that the equity holdings of
financial institutions and business corporations have fallen
while the presence of foreign stockholders has risen. These
trends are often pointed out as signs that the Japanese corporate
governance structure has been approaching the American model and
that this will energize Japanese firms.
The author contradicts common academic theories, however, and
concludes that the formation of the corporate governance which
emphasizes the agency problem between shareholders and corporate
managers is inadequate. He suggests that an institutional
arrangement for a corporate governance system that values a
variety of stakeholders' interests is greatly needed and
concludes that perspectives on maximizing surplus values for
various stakeholders and distributing the surpluses appropriately
among the stakeholders will become increasingly important for the
purpose of managing corporations.
The author contradicts common academic theories, however, and
concludes that the formation of the corporate governance which
emphasizes the agency problem between shareholders and corporate
managers is inadequate. He suggests that an institutional
arrangement for a corporate governance system that values a
variety of stakeholders' interests is greatly needed and
concludes that perspectives on maximizing surplus values for
various stakeholders and distributing the surpluses appropriately
among the stakeholders will become increasingly important for the
purpose of managing corporations.
