Internal Promotion and the Effect of Board Monitoring : A Comparison of Japan and the United States
AbstractThis paper analyses two pronounced features of Japanese corporate governance : large corporate boards almost entirely composed of insiders and the tendency to appoint CEOs through internal promotions. It is often argued that Japanese boards are less effective in monitoring CEOs than U.S. boards which tends to be composed of a small number of directors, majority of which are outsiders. I show that Japanese corporate governance exhibits less inefficiencies than U.S. corporate governance. I further discuss the recent changes in Japanese corporate governance and provide theoretical explanation that they do not necessarily enhance board monitoring.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Finance Working Papers with number 22768.
Date of creation: Jan 2010
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Board Monitoring; Distortion of Bargaining Surplus; Japanese Corporate Governance; US Corporate Governance; Board Size;
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
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