Abstract
Free cash flow theory provides a more consistent explanation of the history of Japanese corporate governance than the main bank system hypothesis does. Sources of discipline on capital investment have been lost since constraints on available funds disappeared in the 1980s, and a market for corporate control is unlikely to emerge in Japan. Internal governance by management will be a major source of discipline as management undertakes reforms to improve return on investment. This voluntary restructuring by management is a move in the right direction, though it is apparently both weaker and slower than one forced by external shareholder pressures.
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Watanabe, S. (1999). After Quasi-LBO Discipline: A Historical Reflection on Japanese Corporate Governance. In: Dirks, D., Huchet, JF., Ribault, T. (eds) Japanese Management in the Low Growth Era. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-58257-8_11
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DOI: https://doi.org/10.1007/978-3-642-58257-8_11
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