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Corporate Governance in Transitional Economies: Lessons from the Prewar Japanese Cotton Textile Industry

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  • Miwa, Yoshiro
  • Ramseyer, J Mark

Abstract

Observers of the formerly communist economies urge firms there to obtain funds from a relatively few sources. They note the problems the firms face: dysfunctional courts, markets, and statutes. Because these firms cannot rely on the courts to discipline managers, they predict that firms will do best if they raise their capital only from a few sources. Firms in Japan at the close of the nineteenth century similarly faced dysfunctional courts, markets, and statutes. Yet the firms that succeeded in Japan were not the ones that took the tack proposed by modern observers. They were the ones that used little debt and raised their equity from a large number of investors. In this article we outline how concentrated finance can introduce problems potentially as severe as the ones it mitigates and discuss why dispersed equity did not reduce firm efficiency in late-nineteenth-century Japan. Copyright 2000 by the University of Chicago.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Legal Studies.

Volume (Year): 29 (2000)
Issue (Month): 1 (January)
Pages: 171-203

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Handle: RePEc:ucp:jlstud:v:29:y:2000:i:1:p:171-203

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Cited by:
  1. Jayati Sarkar & Subrata Sarkar, 2005. "Multiple board appointments and firm performance in emerging economies: Evidence from India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2005-001, Indira Gandhi Institute of Development Research, Mumbai, India.
  2. Yoshiro Miwa & J. Mark Ramseyer, 2000. ""The Fable of the Keiretsu: "Keiretsu" in Keiretsu no Kenkyu"(in Japanese)," CIRJE J-Series CIRJE-J-38, CIRJE, Faculty of Economics, University of Tokyo.
  3. Peter L. Rousseau & Richard Sylla, 2001. "Financial Systems, Economic Growth, and Globalization," Vanderbilt University Department of Economics Working Papers 0119, Vanderbilt University Department of Economics.
  4. Demirguc-Kunt, Asli & Love, Inessa & Maksimovic, Vojislav, 2006. "Business environment and the incorporation decision," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2967-2993, November.
  5. Yoshiro Miwa & J. Mark Ramseyer, 2001. "Property Rights and Indigenous Tradition Among Early 20th Century Japanese Firms," CIRJE F-Series CIRJE-F-104, CIRJE, Faculty of Economics, University of Tokyo.
  6. Miwa, Yoshiro & Ramseyer, J. Mark, 2006. "Japanese industrial finance at the close of the 19th century: Trade credit and financial intermediation," Explorations in Economic History, Elsevier, vol. 43(1), pages 94-118, January.
  7. Tetsuji Okazaki & Chad Syverson & Atsushi Ohyama & Serguey Braguinsky, 2014. "Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry," 2014 Meeting Papers 177, Society for Economic Dynamics.
  8. Miwa Yoshiro & J. Mark Ramseyer, 2000. "Banks and Economic Growth: Implications from Japanese History," CIRJE F-Series CIRJE-F-87, CIRJE, Faculty of Economics, University of Tokyo.
  9. Yoshiro Miwa & J. Mark Ramseyer, 2004. "Industrial Finance Before the Financial Revolution: Japan at the Turn of the Last Century," CIRJE F-Series CIRJE-F-311, CIRJE, Faculty of Economics, University of Tokyo.
  10. Serguey Braguinsky & Atsushi Ohyama & Tetsuji Okazaki & Chad Syverson, 2014. "Acquisitions, Productivity, and Profitability: Evidence from the Japanese Cotton Spinning Industry," NBER Working Papers 19901, National Bureau of Economic Research, Inc.
  11. Yoshiro Miwa & J. Mark Ramseyer, 2004. "Industrial Finance Before the Financial Revolution: Japan at the Turn of the Last Century (Subsequently published in "Explanations in Economic History", 2005, vol. 43, 94-118. )," CARF F-Series CARF-F-018, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  12. Evan Osborne, 2006. "Corruption and Technological Progress: A Takeoff Theory of Good Governance," Atlantic Economic Journal, International Atlantic Economic Society, vol. 34(3), pages 289-302, September.
  13. Aldo Musacchio, 2010. "Law and Finance c. 1900," NBER Working Papers 16216, National Bureau of Economic Research, Inc.
  14. Evan Osborne, 2004. "Corruption and Its Alternatives: A Takeoff Theory of Good Governance," ISER Discussion Paper 0604, Institute of Social and Economic Research, Osaka University.
  15. Leslie Hannah, 2007. "The Divorce of Ownership from Control from 1900: Re-calibrating Imagined Global Historical Trends," CIRJE F-Series CIRJE-F-460, CIRJE, Faculty of Economics, University of Tokyo.

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