Main Results and Their Interpretation

Abstract

In this book, many results that are quite different from the standard hypotheses on corporate governance were obtained from the empirical study using data on Japanese firms. Potentially powerful explanations for this difference include the differences in corporate governance structures between Japan and the US. In the latter, the primary focus of corporate governance is on the relationship between shareholders and top managers. In Japanese firms, however, there are traditionally several kinds of influential stakeholders aside from shareholders, such as main banks, other creditors, member companies for both vertical keiretsu and horizontal keiretsu, business acquaintances utilizing trade credit, employees working within a long-term employment system, and local residents in company towns. It is essential that Japanese firms build credible long-term relationships with these stakeholders and maintain a good reputation. In these business circumstances, it is not necessarily rational to give high priority to promoting the benefits and interests of shareholders and conducting management to promote the self-interest of top managers. In order to reorganize the regional economy, deal with global environmental issues, maintain long-run sustainable development, and reconstruct after the Great East Japan Earthquake, an institutional arrangement for the corporate governance system that attaches a great deal of importance to a variety of stakeholder interests is required.