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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 Unwinding of Cross‐Shareholding in Japan: Causes, Effects, and Implications 1

The Unwinding of Cross‐Shareholding in Japan: Causes, Effects, and Implications 1

(p.79) 3 The Unwinding of Cross‐Shareholding in Japan: Causes, Effects, and Implications1
Corporate Governance in Japan

Hideaki Miyajima (Contributor Webpage)

Fumiaki Kuroki

Oxford University Press

As the ownership structure of Japanese corporations has changed dramatically during the 1990s, this chapter examines the causes and consequences of the decline in cross-shareholding. Using detailed and comprehensive data on ownership structure, including data on individual cross-shareholding relationships and other variables (Tobin's q) developed by the Nissai Life Insurance Research Institute and Waseda University, the chapter highlights the determinants of the choice between holding or selling shares for both banks and firms. Profitable firms with easy access to capital markets and a high level of foreign ownership prior to the banking crisis tended to unwind cross-shareholdings, while low-profit firms which had difficulty accessing capital markets and low foreign ownership tended to keep cross-shareholding with banks. High institutional shareholding and, surprisingly, block shareholding have had positive effects on firms' performance, while bank ownership has had consistently negative effects on firm performance. The result has been a growing diversity of ownership patterns among Japanese firms.

Keywords:   corporate governance, Japanese economy, cross-shareholding, keiretsu, networks, main bank, stock market valuation

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