CORPORATE GOVERNANCE IN JAPAN: INSTITUTIONAL CHANGE AND ORGANIZATIONAL DIVERSITY; ED. BY MASAHIKO AOKI

## Abstract This book uses comparative institutional analysis to explain differences in national economic performance. Countries have their own rules for corporate governance and they have different market arrangements; and these differences in rules and organization affect the way firms behave. Countries also tend to develop conventions of organizational architecture whether their hierarchies are functional, horizontal, or decentralized. This affects the way in which they process information, and information management is increasingly seen as being of crucial importance to a firm's performance. This book accords more importance to these factors than to the factors conventionally used in applying a neoclassical model of economic efficiency. It applies game theory, contract theory, and information theory. By describing the rules and norms in Japan, the USA, and the transitional economies, the book shows how firms can achieve competitive advantage in international markets if these conventions and rules are well suited to the industrial sector in which the firms operate. The book is particularly concerned with how Japan, with its main bank and lifelong employment systems, as well as information-sharing firm organizational structure, might reform its institutions to maintain competitive advantage in the world economy. Contents......Page 6 Preface......Page 8 1. Introduction: The Diversity and Change of Corporate Governance in Japan......Page 10 PART I: CHANGES IN OWNERSHIP AND FINANCE......Page 58 2. Relationship Banking in Post-Bubble Japan: Coexistence of Soft- and Hard-Budget Constraints......Page 60 3. The Unwinding of Cross-Shareholding in Japan: Causes, Effects, and Implications......Page 88 4. Foreign Investors and Corporate Governance in Japan......Page 134 5. Venture Capital and its Governance: The Emergence of Equity Financing Conduits in Japan......Page 160 6. Corporate Governance in Financial Distress: The New Role of Bankruptcy......Page 188 7. The Rise of Bank-Related Corporate Revival Funds......Page 214 PART II: CHANGES IN ORGANIZATION, EMPLOYMENT, AND CORPORATE BOARDS......Page 234 8. Business Portfolio Restructuring of Japanese Firms in the 1990s: Entry and Exit Analysis......Page 236 9. Corporate Finance and Human Resource Management in Japan......Page 266 10. Employment Adjustment and Distributional Conflict in Japanese Firms......Page 291 11. The Turnaround of 1997: Changes in Japanese Corporate Law and Governance......Page 319 12. The Performance Effects and Determinants of Corporate Governance Reform......Page 339 13. Insider Management and Board Reform: For Whose Benefit?......Page 379 PART III: DIVERSITY AND INSTITUTIONAL CHANGE......Page 406 14. Organizational Diversity and Institutional Change: Evidence from Financial and Labor Markets in Japan......Page 408 15. Conclusion: Whither Japan’s Corporate Governance?......Page 436 B......Page 458 C......Page 459 E......Page 460 H......Page 461 J......Page 462 M......Page 463 N......Page 464 R......Page 465 T......Page 466 V......Page 467 Z......Page 468 Contents 6 Preface 8 1. Introduction: The Diversity and Change of Corporate Governance in Japan 10 PART I: CHANGES IN OWNERSHIP AND FINANCE 58 2. Relationship Banking in Post-Bubble Japan: Coexistence of Soft- and Hard-Budget Constraints 60 3. The Unwinding of Cross-Shareholding in Japan: Causes, Effects, and Implications 88 4. Foreign Investors and Corporate Governance in Japan 134 5. Venture Capital and its Governance: The Emergence of Equity Financing Conduits in Japan 160 6. Corporate Governance in Financial Distress: The New Role of Bankruptcy 188 7. The Rise of Bank-Related Corporate Revival Funds 214 PART II: CHANGES IN ORGANIZATION, EMPLOYMENT, AND CORPORATE BOARDS 234 8. Business Portfolio Restructuring of Japanese Firms in the 1990s: Entry and Exit Analysis 236 9. Corporate Finance and Human Resource Management in Japan 266 10. Employment Adjustment and Distributional Conflict in Japanese Firms 291 11. The Turnaround of 1997: Changes in Japanese Corporate Law and Governance 319 12. The Performance Effects and Determinants of Corporate Governance Reform 339 13. Insider Management and Board Reform: For Whose Benefit? 379 PART III: DIVERSITY AND INSTITUTIONAL CHANGE 406 14. Organizational Diversity and Institutional Change: Evidence from Financial and Labor Markets in Japan 408 15. Conclusion: Whither Japan’s Corporate Governance? 436 Index 458 A 458 B 458 C 459 D 460 E 460 F 461 G 461 H 461 I 462 J 462 K 463 L 463 M 463 N 464 O 465 P 465 R 465 S 466 T 466 U 467 V 467 W 468 X 468 Y 468 Z 468

this Book Uses Comparative Institutional Analysis To Explain Differences In National Economic Performance. Countries Have Their Own Rules For Corporate Governance And They Have Different Market Arrangements; And These Differences In Rules And Organization Affect The Way Firms Behave. Countries Also Tend To Develop Conventions Of Organizational Architechture Of Firms, Whether Their Hierarchies Are Functional, Horizontal, Or Decentralized. This Affects The Way In Which They Process Information, And Information Management Is Increasingly Seen As Being Of Crucial Importance To A Firm's Performance.

aoki Accords More Importance To These Factors Than To The Factors Conventionally Used In Applying A Neoclassical Model Of Economic Efficiency. He Applies Game Theory, Contract Theory, And Information Theory. By Describing The Rules And Norms In Japan, The Usa, And The Transitional Economies, Aoki Shows How Firms Can Achieve Competitive Advantage In International Markets If These Conventions And Rules Are Well Suited To The Industrial Sector In Which The Firms Operate. He Is Particularly Concerned With How Japan, With Its Main Bank And Lifelong Employment Systems, As Well As Information-sharing Firm Organizational Structure, Might Reform Its Institutions To Maintain Competitive Advantage In The World Economy.

Debates regarding corporate governance have become increasingly important in Japan as the post-war model of bank-based, stakeholder-oriented corporate governance faces the new pressures associated with globalization and growing investor demands for shareholder value. Bringing together a group of leading scholars from economics, law, sociology and management studies, this book looks at how the Japanese approach to corporate governance and the firm have changed in the post-bubble era. The contributions offer a unique empirical exploration of why and how Japanese firms are reshaping their corporate governance arrangements, leading to greater diversity among firms and new'hybrid'forms of corporate governance. The book concludes by looking at what effect these incremental but transformative changes may have on Japan's distinctive variety of capitalism.