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Does corporate board downsizing increase shareholder value? Evidence from Japan

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  • Uchida, Konari

Abstract

Japanese firms that have traditionally had large boards have recently become subject to pressures for small boards. This study shows that Japanese firms that substantially decreased board size tended to adopt an officer system and so did not substantially decrease the size of the management team (executive officers and directors). This tendency is especially evident for high-performing firms that face less information asymmetry. Japanese firms endogenously choose the change in the management team size when downsizing their boards. Firms that downsize boards do not show performance improvements, suggesting that board downsizing does not necessarily raise shareholder value.

Suggested Citation

  • Uchida, Konari, 2011. "Does corporate board downsizing increase shareholder value? Evidence from Japan," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 562-573, October.
  • Handle: RePEc:eee:reveco:v:20:y:2011:i:4:p:562-573
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    References listed on IDEAS

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    Cited by:

    1. Huang, Ying Sophie & Wang, Chia-Jane, 2015. "Corporate governance and risk-taking of Chinese firms: The role of board size," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 96-113.
    2. Chen, I-Ju, 2014. "Financial crisis and the dynamics of corporate governance: Evidence from Taiwan's listed firms," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 3-28.
    3. Yeh, Yin-Hua & Shu, Pei-Gi & Chiang, Tsui-Lin, 2014. "Affiliation and professionalism: Alternative perspectives on decomposing the board structures of financial institutions," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 159-174.
    4. repec:hit:hcfrwp:2 is not listed on IDEAS
    5. Elizabeth Motta & Konari Uchida, 2016. "Institutional investors, corporate social responsibility, and stock price performance," Working Papers halshs-01680385, HAL.
    6. repec:eee:riibaf:v:42:y:2017:i:c:p:689-709 is not listed on IDEAS

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