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Changes in the Japanese Postwar Corporate Governance System in the 1990s

  • Nikolay Trifinov Naydenov

The study deals with the specific features of Japanese corporate governance that can be summarized in: 1) insider control system with internal disciplining mechanisms based on lifetime employment and the employee ambition for promotion, and 2) internalized monitoring by external stakeholders through establishment of long-term interfirm relationships within a common grouping based on cross shareholding and corporate interconnectedness. The traditional corporate control mechanisms – internal and external – in Japanese companies until the 1990s have been analyzed, as well as the objectives of corporate managers in Japan. The changes in the corporate governance system have been traced both in the formal institutional framework and in economic practices. The changes in employment relations have been discussed as the basis of the internal disciplining mechanisms. In conclusion, the incompleteness of the changes in the corporate governance system, and the possible directions for its future development have been analyzed.

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Article provided by Bulgarian Academy of Sciences - Economic Research Institute in its journal Economic Studies.

Volume (Year): (2005)
Issue (Month): 3 ()
Pages: 124-150

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Handle: RePEc:bas:econst:y:2005:i:3:p:124-150
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  1. Odagiri, Hiroyuki, 1994. "Growth through Competition, Competition through Growth: Strategic Management and the Economy in Japan," OUP Catalogue, Oxford University Press, number 9780198288732.
  2. Steven N. Kaplan, 1997. "Corporate Governance And Corporate Performance: A Comparison Of Germany, Japan, And The U.S," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(4), pages 86-93.
  3. Kaplan, Steven N. & Minton, Bernadette A., 1994. "Appointments of outsiders to Japanese boards: Determinants and implications for managers," Journal of Financial Economics, Elsevier, vol. 36(2), pages 225-258, October.
  4. Aoki, Masahiko, 1990. "Toward an Economic Model of the Japanese Firm," Journal of Economic Literature, American Economic Association, vol. 28(1), pages 1-27, March.
  5. Kaplan, Steven N, 1994. "Top Executive Rewards and Firm Performance: A Comparison of Japan and the United States," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 510-46, June.
  6. Prowse, Stephen D, 1992. " The Structure of Corporate Ownership in Japan," Journal of Finance, American Finance Association, vol. 47(3), pages 1121-40, July.
  7. Kang, Jun-Koo & Shivdasani, Anil, 1995. "Firm performance, corporate governance, and top executive turnover in Japan," Journal of Financial Economics, Elsevier, vol. 38(1), pages 29-58, May.
  8. Julian Franks & Colin Mayer, 1997. "Corporate Ownership And Control In The U.K., Germany, And France," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(4), pages 30-45.
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