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Corporate Governance in JapanInstitutional Change and Organizational Diversity$
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Masahiko Aoki, Gregory Jackson, and Hideaki Miyajima

Print publication date: 2007

Print ISBN-13: 9780199284511

Published to Oxford Scholarship Online: September 2007

DOI: 10.1093/acprof:oso/9780199284511.001.0001

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The Performance Effects and Determinants of Corporate Governance Reform 1

The Performance Effects and Determinants of Corporate Governance Reform 1

Chapter:
(p.330) 12 The Performance Effects and Determinants of Corporate Governance Reform1
Source:
Corporate Governance in Japan
Author(s):

Hideaki Miyajima (Contributor Webpage)

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199284511.003.0012

This chapter addresses the introduction of the executive officer system as an alternative to the traditional insider board structure. As a result, since 1997 board sizes have decreased and a greater separation has been made between monitoring and management responsibilities. Some firms have also introduced outside directors and performance-related compensation schemes, such as stock options. The extent of these reforms among Japanese firms is examined using a survey-based Corporate Governance Score (CGS) for each corporation. Higher CGS scores are associated with better performance, a higher percentage of foreign shareholders, and a lower percentage of stable shareholders. However, among firms exposed to capital market pressures, the presence of strong employee participation also has a significant positive impact on the degree of reform and suggests a strong mutual reliance on capital markets and long-term employment among strongly performing Japanese firms.

Keywords:   Japanese economy, board of directors, non-executive directors, independence, shareholder rights, employee participation

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