AbstractThis paper addresses a fundamental question on corporate governance, “What did corporate executives, outside directors and large shareholders really do ?” Although this question is essential, it has not been fully addressed in the literature, basically due to the constraint of relevant materials. This paper overcomes this problem by using a detailed diary written by Hachisaburo Hirao, who worked for many large companies, including Tokyo Marine and Fire Insurance Co. and Taisho Marine and Fire Insurance Co. in prewar Japan. In this diary he described in detail how corporate executives, outside directors and large shareholders thought and acted. Based on this diary and other related materials, it is revealed that in Tokyo Marine and Fire Insurance Co. and Taisho Marine and Fire Insurance Co., planning and implementation of managerial policies were basically entrusted to their corporate executives. This means that there existed agency relationships between shareholders and corporate executives. Meanwhile, the agency problem was resolved through a voice mechanism from outside directors representing large shareholders and large shareholders themselves to corporate executives. Outside directors and large shareholders indeed gave advice, pressure and ratification on managerial policies. These findings imply that these companies were governed by a typical Anglo-Saxon mode of corporate governance.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series PRIMCED Discussion Paper Series with number 22.
Length: 16, p
Date of creation: Oct 2011
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-10 (All new papers)
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