Purifying Japan's Banks: Issues and Implications
AbstractWe use a simple real options framework and empirical data to establish that although Japanese banks hold borrowers' shares, their interest is more along the lines of a contractual claimant than a residual claimant of corporations. We then explain why the Japanese model of corporate governance was useful during the "catching-up" growth of that country's postwar reconstruction decades but became problematic subsequently. The interests of shareholders, creditors, workers, and managers are more readily aligned because such growth entails investment in knowntechnology physical-capital-intensive projects with highly predictable cash flows. Once firms are on the technological frontier, "keeping-up" growth requires risk taking and a tolerance for "creative destruction." This is better accommodated by entrusting corporate governance to firms' true residual claimants, their shareholders. (c) 2006 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by MIT Press in its journal Asian Economic Papers.
Volume (Year): 5 (2006)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://mitpress.mit.edu/journals/
Other versions of this item:
- Randall Morck & Bernard Yeung, 2006. "Purifying Japan's Banks: Issues and Implications," Harvard Institute of Economic Research Working Papers 2103, Harvard - Institute of Economic Research.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Jean McGuire & Sandra Dow, 2009. "Japanese keiretsu: Past, present, future," Asia Pacific Journal of Management, Springer, vol. 26(2), pages 333-351, June.
- Yener Altunbaş & Alper Kara & Adrian van Rixtel, 2007. "Corporate governance and corporate ownership: The investment behaviour of Japanese institutional investors," Banco de Espaï¿½a Occasional Papers 0703, Banco de Espa�a.
- Aggarwal, Raj & Dow, Sandra M., 2012. "Dividends and strength of Japanese business group affiliation," Journal of Economics and Business, Elsevier, vol. 64(3), pages 214-230.
- Toru Yoshikawa & Jean McGuire, 2008. "Change and continuity in Japanese corporate governance," Asia Pacific Journal of Management, Springer, vol. 25(1), pages 5-24, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karie Kirkpatrick).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.