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Financial Ownership, Diversification and Firm Profitability in Japan

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  • Eric Gedajlovic
  • Daniel Shapiro
  • Bogdan Buduru

Abstract

The Japanese system of corporate governance andin particular the role played by banks andother financial institutions have been thesubject of considerable research andcontroversy in recent years. We estimate theimpact of equity ownership by financialinstitutions on firm performance in Japan for1986–1991, a period that precedes many of theproblems of the ensuing decade. We find thatwhile ownership by financial institutions isassociated with unprofitable diversification,such ownership is, on balance, positivelyassociated with firm profitability. Someimplications of these findings for Japan'sunique system of governance are discussed. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • Eric Gedajlovic & Daniel Shapiro & Bogdan Buduru, 2003. "Financial Ownership, Diversification and Firm Profitability in Japan," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 7(3), pages 315-335, September.
    • Handle: RePEc:kap:jmgtgv:v:7:y:2003:i:3:p:315-335
    DOI: 10.1023/A:1025029601562
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    2. Fumitoshi Mizutani & Eri Nakamura, 2014. "Managerial incentive, organizational slack, and performance: empirical analysis of Japanese firms’ behavior," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(1), pages 245-284, February.

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