Skip to main content
SpringerLink
Log in

The Impact of Global Capital Market Exposure and Stable Ownership on Investor Relations Practices and Performance of Japanese Firms

  • Published:
Asia Pacific Journal of Management Aims and scope Submit manuscript

Abstract

This paper examines whether greater exposure to global capital markets, stable share ownership, and group affiliation of Japanese firms have any impact on the quality of their investor relations practices (IR) and market-value added (MVA). The results indicate that foreign ownership and foreign listings are positively associated with IR. Foreign listings are also positively associated with MVA. However, stable ownership and group affiliation do not seem to have any impact on IR. These findings suggest that Japanese firms that are more exposed to global capital markets are more likely to adopt shareholder-oriented policies rather than stakeholder-oriented policies.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Abegglen, J. and G. Stalk. (1985). Kaisha: The Japanese Corporation. New York: Basic Books.

    Google Scholar 

  • Amihud, Y. and B. Lev. (1981). “Risk Reduction as a Managerial Motive for Conglomerate Mergers.” Bell Journal of Economics 12, 605-617.

    Google Scholar 

  • Alchain, A. and H. Demsetz. (1972). “Production, Information Costs, and Economic Organization.” American Economic Review 62, 777-795.

    Google Scholar 

  • Aoki, M. (1990). “Towards an Economic Model of the Japanese Firm.” Journal of Economic Literature 28, 1-27.

    Google Scholar 

  • Aoki, M., H. Patrick, and P. Sheard. (1994). “The Japanese Main Bank System: An Introductory Overview.” In M. Aoki and H. Patrick (eds.), The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies. Oxford: Oxford University Press, pp. 3-50.

    Google Scholar 

  • Barton, S.L. and P.J. Gordon. (1988). “Corporate Strategy and Capital Structure.” Strategic Management Journal9, 623-632.

    Google Scholar 

  • Baysinger, B., R. Kosnik, and T.A. Turk. (1991). “Effects of Board and Ownership Structure on Corporate R&D Strategy.” Academy of Management Journal 34, 205-214.

    Google Scholar 

  • Berle, A. and C. Means. (1932). The Modern Corporation and Private Property. New York: Macmillan.

    Google Scholar 

  • Bettis, R.A. (1983). “Modern Financial Theory, Corporate Strategy and Public Policy: Three Conundrums.” Academy of Management Review 8, 406-415.

    Google Scholar 

  • Buhner, R., A. Rasheed, J. Rosenstein, and T. Yoshikawa. (1998). “Research on Corporate Governance: A Comparison of Germany, Japan, and the U.S.” Advances in International Comparative Management 12, 121-155.

    Google Scholar 

  • Caves, R. and M. Uekusa. (1976). Industrial Organization in Japan. Washington DC: Brookings Institution.

    Google Scholar 

  • Charkham, J. (1994). Keeping Good Company: A Study of Corporate Governance in Five Countries. Oxford: Clarendon Press.

  • Christensen, H. and C. Montgomery. (1981). Corporate Economic Performance: Diversification Strategy Versus Market Structure.” Strategic Management Journal 2, 327-343.

    Google Scholar 

  • Clark, R. (1979). The Japanese Company. New Heaven: Yale University Press.

    Google Scholar 

  • Desai, A.S., A. Fatemi, and J.P. Katz. (1999). “Wealth Creation and Managerial Pay:MVAandEVAas Determinants of Executive Compensation.” A paper presented at the Academy of Management Annual Meeting

  • Dhaliwal, D.S. (1979). “Disclosure Regulations and the Cost of Capital.” Southern Economic Journal 45, 785-794.

    Google Scholar 

  • Easterbrook, F.H. (1984). “Two Agency Cost Explanations of Dividends.” American Economic Review 74, 650-659.

    Google Scholar 

  • Flath, D. (1993). “Shareholding in the Keiretsu, Japan's Financial Groups.” Review of Economics and Statistics75, 249-257.

    Google Scholar 

  • Gerlach, M.L. (1992). Alliance Capitalism: The Social Organization of Japanese Business. Berkeley, CA: University of California Press.

    Google Scholar 

  • Gilson, R.J. and M.J. Roe. (1993). “Understanding the JapaneseKeiretsu: Overlaps between Corporate Governance and Industrial Organization.” Yale Law Journal 102, 871-906.

    Google Scholar 

  • Hill, C.W. and S. Snell. (1988). “External Control, Corporate Strategy, and Firm Performance in Research Intensive Industries.” Strategic Management Journal 9, 577-590.

    Google Scholar 

  • Hill, C.W. and S. Snell. (1989). “The Effects of Ownership Structure and Control on Corporate Productivity.” Academy of Management Journal 32, 25-46.

    Google Scholar 

  • Hodak, M. (1994). “How EVA Can Help Trun Mid-Sized Firms into Large Companies.” Journal of Applied Corporate Finance 7, 98-102.

    Google Scholar 

  • Hoshi, T., A. Kashyap, and D. Scharfstein. (1990). “The Role of Banks in Reducing the Costs of Financial Distress in Japan.” Journal of Financial Economics 27, 67-88.

    Google Scholar 

  • Hoshi, T., A. Kashyap, and D. Scharfstein. (1991). “Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups.” Quarterly Journal of Economics 106, 33-60.

    Google Scholar 

  • Hudley, G. and C.K. Jacobson. (1998). “The Effects of the Keiretsu on the Export Performance of Japanese Companies: Help or Hindrance?” Strategic Management Journal 19, 927-937.

    Google Scholar 

  • Jensen, M., and W. Meckling. (1976). “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Journal of Financial Economics 3, 305-360.

    Google Scholar 

  • Jensen, M., and R.S. Ruback. (1983). “The Market for Corporate Control: The Scientific Evidence.” Journal of Financial Economics 11, 5-50.

    Google Scholar 

  • Kang, J-K and A. Shvdasani. (1999). “Alternative Mechanisms for Corporate Governance in Japan: An Analysis of Independent and Bank-Affiliated Firms.” Pacific-Basin Finance Journal 7, 1-22.

    Google Scholar 

  • Kaplan, S.N. (1994). “Top Executive Rewards and Firm Performance: A Comparison of Japan and the United States.” Journal of Political Economy 102, 510-546.

    Google Scholar 

  • Kester, W.C. (1991). Japanese Takeovers: The Global Contest for Corporate Control. Boston: Harvard Business School Press.

    Google Scholar 

  • Khanna, T. and K. Palepu. (1997). “Why Focused Strategies May Be Wrong for Emerging Markets.” Harvard Business Review 75, 41-51.

    Google Scholar 

  • Khanna, T. and J.W. Rivkin. (2001). “Estimating the Performance Effects of Business Groups in Emerging Markets.” Strategic Management Journal 19, 555-578.

    Google Scholar 

  • Kikuchi, M. (1999). Kigyo Kachi Hyoka Kakumei (Revolution in corporate valuation). Tokyo: Toyo Keizai Shimposha.

    Google Scholar 

  • Kochhar, R. and P. David. (1996). “Institutional Investors and Firm Innovation: A Test of Competing Hypotheses.” Strategic Management Journal 17, 73-84.

    Google Scholar 

  • Lane, P.J., A.A. Cannella, and M.H. Lubatkin. (1998). “Agency Problems as Antecedents to Unrelated Mergers and Diversification: Amihud and Lev Reconsidered.” Strategic Management Journal 19, 555-578.

    Google Scholar 

  • Lehn, K. and A. Makhija. (1996). “EVA and MVA as Performance Measures and Signals for Strategic Change.” Strategy and Leadership, May/June, 34-38.

  • Lev, B. (1992). “Information Disclosure Strategy.” California Management Review 34, 9-32.

    Google Scholar 

  • Lincoln, J.R., M.L. Gerlach, and P. Takahashi. (1992). “Keiretsu Networks in the Japanese Economy: A Dyad Analysis on Intercorporate Ties.” American Sociological Review 57, 561-585.

    Google Scholar 

  • Lubatkin, M. and S. Chatterjee. (1994). “Extending Modern Portfolio Theory into the Domain of Corporate Diversification: Does It Apply?” Academy of Management Journal 37, 109-136.

    Google Scholar 

  • Morck, R. and M. Nakamura. (1999). “Banks and Corporate Control in Japan.” Journal of Finance 54, 319-339.

    Google Scholar 

  • Nakatani, I. (1984). “The Economic Role of Financial Corporate Grouping.” In M. Aoki (ed.), The Economic Analysis of the Japanese Firm. Amsterdam: North-Holland, pp. 227-258.

    Google Scholar 

  • Phan, P.H. and T. Yoshikawa. (2000). “Agency Theory and Japanese Corporate Governance.” Asia Pacific Journal of Management 17, 1-27.

    Google Scholar 

  • Porter, M. (1987). “From Competitive Advantage to Corporate Strategy.” Harvard Business Review, May-June, 43-59.

  • Prowse, S.D. (1990). “Institutional Investment Patterns and Corporate Financial Behavior in the United States and Japan.” Journal of Financial Economics 27, 43-66.

    Google Scholar 

  • Rosenbluth, F.M. (1989). Financial Politics in Contemporary Japan. Ithaca, NY: Cornell University Press.

    Google Scholar 

  • Saudagaran, S.M. (1988). “An Empirical Study of Selected Factors Influencing the Decisions to List on Foreign Stock Exchanges.” Journal of International Business Studies 19, 1011-127.

    Google Scholar 

  • Saudagaran, S.M. and G.C. Biddle. (1995). “Foreign Listing Location: A Study of MNCs and Stock Exchanges in Eight Countries.” Journal of International Business Studies 26, 319-341

    Google Scholar 

  • Sheard, P. (1989). “The Main Bank System and Corporate Monitoring and Control in Japan.” Journal of Economic Behavior and Organization 11, 399-422.

    Google Scholar 

  • Sheard, P. (1994). “Interlocking Shareholdings and Corporate Governance.” In M. Aoki and R. Dore (eds.), The Japanese Firm: The Sources of Competitive Strength. Oxford: Oxford University Press, pp. 310-349.

    Google Scholar 

  • Sheard, P. (1997). Mein Banku Shihonshugi no Kiki (Crisis of the main bank capitalism). Tokyo: Toyo Keizai Shimposha.

    Google Scholar 

  • Shleifer, A. and R.W. Vishny. (1997). “A Survey of Corporate Governance.” Journal of Finance 52, 737-783.

    Google Scholar 

  • Sohn, J.H. (1994). “Social Knowledge as a Control System: A Proposition and Evidence from the Japanese FDI Behavior.” Journal of International Business Studies 25, 295-324.

    Google Scholar 

  • Sundaram, A.K. and D.E. Logue. (1996). “Valuation Effects of Foreign Company Listings on U.S. Exchanges.” Journal of International Business Studies 27, 67-88.

    Google Scholar 

  • Suto, M., K. Matsuura, and Y. Yonezawa. (1996). Nihon no Kigyo Kinyu (Corporate finance in Japan). Tokyo: Toyo Keizai Shimposha.

    Google Scholar 

  • Tully, S. (1993). “The Real Key to Creating Wealth.” Fortune, September, 38-50.

  • Useem, M. (1998). “Corporate Leadership in a Globalizing Equity Market.” Academy of Management Executive12(4), 43-59.

    Google Scholar 

  • Uyemura, D.G., C.C. Kantor, and J.M. Pettit. (1996). “EVA for Banks: Value Creation, Risk Management, and Profitability Management.” Journal of Applied Corporate Finance 9, 94-113.

    Google Scholar 

  • Yoshikawa, T. and J. Linton. (2000). “The Applicability of North American Corporate Governance and Investor Relations Practice to Japanese Firms: Theoretical Support and Preliminary Investigation.” Journal of Asian Business 16, 1-24.

    Google Scholar 

  • Yoshikawa, T. and P.H. Phan. (2001). “Alternative Corporate Governance Systems in Japanese Firms: Implications for a Shift to Stockholder-Centered Corporate Governance.” Asia Pacific Journal of Management 18, 183-205.

    Google Scholar 

  • Weimer, J. and J.C. Pape. (1999). “A Taxonomy of Systems of Corporate Governance.” Corporate Governance: An International Review 7, 152-166.

    Google Scholar 

  • Weinstein, D.E. and Y. Yafeh. (1998). “On the Costs of a Bank-Centered Financial System: Evidence from the Changing Main Bank Relations in Japan.” Journal of Finance 53, 635-672.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Singapore Management University, School of Business, Business Block # 04-13, 469 Bukit Timah Road, Singapore, 259756

    Toru Yoshikawa

  2. Rotterdam School of Management, Erasmus University, Rotterdam, Burg. Oudlaan 50, P.O.Box 1738, 3000 DR, Rotterdam, The Netherlands

    Eric R. Gedajlovic

Authors
  1. Toru Yoshikawa
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Eric R. Gedajlovic
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Yoshikawa, T., Gedajlovic, E.R. The Impact of Global Capital Market Exposure and Stable Ownership on Investor Relations Practices and Performance of Japanese Firms. Asia Pacific Journal of Management 19, 525–540 (2002). https://doi.org/10.1023/A:1020569609552

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1020569609552

Search

Navigation