Corporate Governance in Transitional Economies: Lessons from the Pre-War Japanese Cotton Textile Industry
AbstractObservers of the formerly communist transitional economies urge firms there to obtain funds from a relatively few sources. They note the institutional problems the firms face: courts not working, markets not developed, statutes not written. 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 concentrated sources. Firms in Japan at the close of the 19th century faced a similar "transitional" institutional environment. They too faced disfunctional courts, nascent markets, and non-existent statutes. Yet the firms that succeeded in Japan were not the ones that took the tack proposed by modern observers of transitional economies. 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 supposedly mitigates, and discuss why dispersed equity did not reduce firm efficiency in late-19th century Japan. Although investors with relatively large stakes can indeed provide a firm value, they do so only under limited conditions -- and we explore what some of those conditions might be.
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.
Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-48.
Length: 31 pages
Date of creation: May 1999
Date of revision:
Contact details of provider:
Postal: Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033
Web page: http://www.cirje.e.u-tokyo.ac.jp/index.html
More information through EDIRC
Other versions of this item:
- Miwa, Yoshiro & Ramseyer, J Mark, 2000. "Corporate Governance in Transitional Economies: Lessons from the Prewar Japanese Cotton Textile Industry," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 171-203, January.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- 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.
- 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.
- 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.
- Peter L. Rousseau & Richard Sylla, 2003. "Financial Systems, Economic Growth, and Globalization," NBER Chapters, in: Globalization in Historical Perspective, pages 373-416 National Bureau of Economic Research, Inc.
- Peter L. Rousseau & Richard Sylla, 2001. "Financial Systems, Economic Growth, and Globalization," NBER Working Papers 8323, National Bureau of Economic Research, Inc.
- Sarkar, Jayati & Sarkar, Subrata, 2009.
"Multiple board appointments and firm performance in emerging economies: Evidence from India,"
Pacific-Basin Finance Journal,
Elsevier, vol. 17(2), pages 271-293, April.
- 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.
- Jayati Sarkar & Subrata Sarkar, 2005. "Multiple Board Appointments and Firm Performance in Emerging Economies : Evidence from India," Microeconomics Working Papers 22394, East Asian Bureau of Economic Research.
- Aldo Musacchio, 2010. "Law and Finance c. 1900," NBER Working Papers 16216, National Bureau of Economic Research, Inc.
- Demirguc-Kunt, Asli & Love, Inessa & Maksimovic, Vojislav, 2004.
"Business Environment and the Incorporation Decision,"
Policy Research Working Paper Series
3317, The World Bank.
- 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.
- 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.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office).
If references are entirely missing, you can add them using this form.