We examine the turnover of top executives in Japanese firms throughout the period 1990–2013. During this time, the presence of a main bank has been weakened, the ownership of institutional investors has rapidly increased, and independent outside directors have been introduced in many firms. We find that top executive turnover sensitivity to corporate performance has not changed despite skepticism on corporate governance of Japanese firms. On the other hand, there is a shift from return on assets (ROA) to return on equity (ROE) and stock returns as performance indicators that turnover is most sensitive to. We also examine possible sources of this change. We find that foreign institutional investors strengthen the turnover sensitivity to ROE after banking crisis when their shareholding has dramatically increased. This result allows us to interpret that they began to play a disciplinary role. In contrast, we do not find that independent outside directors have any significant effect of enhancing turnover sensitivity to ROE, unless a firm appointed independent outside directors more than three. While the scope of the main bank's authority has substantially contracted, strong ties with main banks increase turnover sensitivity in the more recent period, indicating that main banks continue to perform a certain role in disciplining management.

高度成長期から石油ショック後にかけてメインバンクは，日本企業の資金調達及び企業統治において中心的役割を担ってきた．しかし，1980年代の規制緩和の進展や1990年代の銀行危機，その後のメガバンクの設立などを経て，企業・銀行関係は多様化が進展している．本稿では，20世紀の企業・銀行関係，とりわけメインバンク・システムをめぐる歴史と，近年の企業・銀行関係の実態を展望する．

高度成長期から石油ショック後にかけてメインバンクは，日本企業の資金調達及び企業統治において中心的役割を担ってきた．しかし，1980年代の規制緩和の進展や1990年代の銀行危機，その後のメガバンクの設立などを経て，企業・銀行関係は多様化が進展している．本稿では，20世紀の企業・銀行関係，とりわけメインバンク・システムをめぐる歴史と，近年の企業・銀行関係の実態を展望する．

Twentieth century Japan provides a remarkable laboratory for examining how an externally imposed institutional and regulatory intervention affects the ownership of corporations. In the first half of the century, Japan had weak legal protection but strong institutional arrangements. The institutions were dismantled after the war and replaced by a strong form of legal protection. This inversion resulted in a switch from Japan being a country in which equity markets flourished and ownership was dispersed in the first half of the century to one in which banks and companies dominated with interlocking shareholdings in the second half of the century. (JEL G32, K22)

Purpose: The purpose of this paper is to examine how corporate headquarters control business units, the governing of which has emerged as a vital issue as business portfolios have grown increasingly complex due to diversification, globalization, and corporate group expansion via spinoffs and mergers and acquisitions. Design/methodology/approach: This study utilized questionnaire survey data from 251 firms listed on the First Section of the Tokyo Stock Exchange. The authors approached the issue of business unit governance by measuring the degree of decentralization and the intensity of monitoring, and compared the governance of internal business units with that of subsidiaries, and analyzed the impact of corporate governance characteristics on business unit governance. Findings: Comparing in-house business units and subsidiaries, the authors found a significant difference in their governance. The degree of decentralization toward subsidiaries was higher for strategic and personnel decision-making. However, the complementarity of decentralization and monitoring was not observed for subsidiaries, whereas it was for in-house business units. Subsidiary monitoring corresponding to decentralization was inadequate. Examining the relationship between corporate governance and business unit governance, the paper found that firms with reformed boards of directors and under a greater degree of pressure from capital markets monitored their business units more strictly. Originality/value: The paper shows how the business portfolios and governance arrangements of Japanese firms have changed since the 1990s, and analyzes business unit governance based on valuable data obtained from a questionnaire survey. © Emerald Group Publishing Limited.

The objective of this article is to examine the evolution and economic function of business groups, often referred to as zaibatsu, in prewar Japan. It should be noted, however, that, in spite of the prominence of the zaibatsu as economic actors, the share of business groups in the prewar economy was not as high as is often assumed. While the share of business groups in an economy varies depending on definitions of business groups and dates of estimation, their prewar share was also modest when compared to the shares of their counterparts in developing economies. In prewar Japan, most large firms operated as stand-alone entities, and most of them were listed on the stock exchange. Focusing on the three established zaibatsu and Nissan, this article examines how business groups evolved in prewar Japan, and what functions they served.

Purpose - This study sets out to explore questions such as: "Does mission statement matter? If so, in what ways?" Using data on mission statements of 128 large Japanese firms, the paper aims to show that corporate mission has a significant impact on corporate policies that determine employment, board, and financial structures.
Design/methodology/approach - The paper provides evidence that strong-mission firms are more likely to retain incumbent employees, promote managers from within firms, and have less debt and a higher percentage of interlocking shareholdings than weak-mission firms.
Findings - The evidence supports the view that strong-mission firms value their organizational capital and thus tend to adopt policies to preserve it. It also confirms that corporate mission and its embedded policies contribute to better corporate performance. The paper suggests that the effect of explicit corporate mission and its implementation has practical impacts in corporate policies and business outcomes.
Research limitations/implications - The sample is based on firms from Japan. The criteria used to discriminate between strong mission and weak mission firms need further refinement with more rigorous sub-dimensions. In the Japanese context the percentage of inside directors is an important indication of internally promoted managers one might argue that a measure of external pressures (e.g. law, codes, investors, etc.) might be a better one. The small number of cases and the richness of statements need a richer qualitative analysis in the future.
Practical implications - The empirical results provide helpful insight on the organizational behavior of Japanese firms during the long economic downturn from the 1990s to 2000s in Japan and an insight on what to do in view of the challenges facing Japanese firms.
Originality/value - The paper presents a model that clarifies the role of mission statement. The extensive literature review includes a diverse set of papers on the role of mission statement. The empirical results suggest how strong Japanese corporate mission, expressed in mission statements, might have impact on corporate outcomes through the formation and utilization of Monozukuri.

© Oxford University Press, 2013. This chapter addresses the introduction of the executive officer system as an alternative to the traditional insider board structure. As a result, since 1997 board sizes have decreased and a greater separation has been made between monitoring and management responsibilities. Some firms have also introduced outside directors and performance-related compensation schemes, such as stock options. The extent of these reforms among Japanese firms is examined using a survey-based Corporate Governance Score (CGS) for each corporation. Higher CGS scores are associated with better performance, a higher percentage of foreign shareholders, and a lower percentage of stable shareholders. However, among firms exposed to capital market pressures, the presence of strong employee participation also has a significant positive impact on the degree of reform and suggests a strong mutual reliance on capital markets and long-term employment among strongly performing Japanese firms.

© Oxford University Press, 2013. 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.

© Oxford University Press, 2013. This chapter examines the changes in the Japanese main banking system. Despite the deregulation of bond markets in the mid-1990s, the overall dependence of firms on bank borrowing increased rather than decreased among listed firms during the 1990s. Large firms lessened their ties with banks and began financing through bonds, yet smaller listed firms continued borrowing from banks. In particular, firms with previously high levels of bank debt relied on their main bank for an increasing proportion of those loans. By estimating the employment adjustment function, the chapter shows that the main banks did not effectively discipline corporate restructuring, although banks encouraged the restructuring of firms with a relatively better performance. As Japan recovers from the banking crisis, main bank relationships are likely to survive among a segment of smaller and less internationalized Japanese firms.

© Oxford University Press, 2013. The introductory chapter gives a comprehensive overview of the crisis and transformation of corporate governance in Japan since the mid-1990s. Drawing on the main empirical findings of the book, these changes are examined in relation to three areas: corporate ownership and finance, patterns of corporate organization and employment, and changes in the legal and governance role of the board of directors. Based on data from a Japanese Ministry of Finance survey, a summary typology of corporate governance practices in Japanese firms is developed that identifies three major clusters or types: firms with traditional Japanese-style practices, firms with hybrid practices combining market-oriented finance and governance with relationship-oriented employment, and firms with 'inverse' hybrid practices that combine relationship-oriented finance and governance with market-oriented employment. The implications of this growing diversity in organizational practices are discussed in relation to institutional change and the viability of a new Japanese-style model of corporate governance in the future.

We calculate abnormal stock returns for Japanese non-financial companies around major events associated with the banking crisis (1995-2000), and find that not all companies were equally sensitive to the malaise of the banking sector: the most affected were small, leveraged, low-tech companies with low credit ratings and low market to book ratios. This is consistent with "credit crunch" theories (companies with limited access to financial markets are sensitive to changes in bank lending) and with claims that innovation is rarely financed by bank debt. We do not find much evidence on the alleged misallocation of loans to support ailing bank clients. (c) 2007 Elsevier B.V. All rights reserved.

The purpose of this paper is to test hypotheses regarding the mix of bank borrowing and bonds that occur under relationship banking, thereby constructing a detailed data set on the debt structure of large Japanese firms from the late 1980s to the 1990s. We show that debt choice is affected by main bank relationships, in the sense that successful firms with strong bank ties are much more likely to issue public bonds than resort to bank borrowing.

Japan is currently undergoing many interesting changes, which the Japanese government trumpets as fundamental reform, but which some observers suspect will turn out to be superficial, part of a long sequence of changes which have been much less far-reaching than at first anticipated. This book provides a survey of the many changes currently in progress in Japan, including political reform, economic deregulation and liberalisation, and reforms to environmental policy, science and technology, education, and immigration policy. The essays in this volume explore the reform process in Japan overall, and provides a thorough overview of major current developments in Japan. © 2002 Javed Maswood, Jeffrey Graham and Hideaki Miyajima
All rights reserved.

We investigate the effects of the Japanese corporate governance structure on corporate investments, especially R&D, dividing Japanese high R&D firms into two groups, i.e, young growing firms and old mature firms. The main bank relationship mitigates the asymmetric information problem for young growing firms' R&D expenditure in the 1990s, Portfolio investors strengthen the cash constraints on R&D, while stable shareholders offset the myopic pressure by portfolio investors. We also show some evidence that stable shareholders induced old mature firms to overinvest during the bubble economy period.

<p>本稿の目的は，これまで日本企業にユニークな特性と理解されてきたメインバンクの介入によるコーポレート・ガバナンスの機能が，1990年代に入っていかに変化しているかを検討する点にある．そのために，本稿では，電機・化学・建設の3部門の上場企業のうち財務危機に陥った企業（2年連続インタレスト・カバレッジ・レシオが1未満の企業）を分析の対象に取り上げ，この財務危機企業に対して，①メインバンクが経営に介人しているか，②メインバンクの介人があった場合，それは企業経営にいかなる変化を引き起こしているかを定量的に検討した．そして，1990年代の財務危機企業に対するメインバンクの介入の分析結果を，これまでメインバンク介人型ガバナンスがもっとも典型的にワークしていたと理解されてきた石油ショック後の期間（1974-82年）の分析結果と比較した．その結果，企業が財務危機に陥った際にメインバンクが経営に介人する確率は，90年代には石油ショック後に比べて大きく低下していること，また，メインバンクが介人したとしても，経営者交代の時期の遅れ，収益の回復の遅れなど，90年代にはその介入の効果が薄れていることを示唆する事実が明らかとなった．</p>

The purpose of this article is to clarify how and why the zaibatsu in prewar Japan were transformed into corporate groups in postwar Japan, and to show what functions the corporate groups played in the initial phase of the transformation period (1949-mid-1950s), by focusing on three large zaibatsu organizations. This paper first briefly sketches the impact of dissolution on the corporate structure of former zaibatsu-line companies. Next, it investigates the forming of keiretsu financing and its functions by considering the accumulation of information concerning borrowers. It then explains the process of forming cross-shareholding in terms of two factors: firms′ attempts to keep autonomous management and to facilitate the increase of paid-in capital on the one hand, and banks′ attempts to monitor them on the other. Finally, this paper provides perspectives on corporate groups′ activities during the high-growth era. J. Japan. Int. Econ., September 1994, 8(3), pp. 293-328. School of Commerce, Waseda University, 6-1 Nishi-waseda 1-Chome, Shinjuku-ku, Tokyo, Japan. © 1994 Academic Press Limited.

If we could grasp &#039;industrial discipline&#039; as relationships among firms, industrial relations between labor and management, and government intervention against such relations, &#039;industrial discipline&#039; in this sense underwent a great change at the time of Great Depression. Freedom of trade and cartel contract which government officially permitted in the 1920s was restricted by the enactment of the Law of Control to Important Industries in 1931. Since then, government positively intervened in industrial oraganization by encouraging cartel and trust, and guiding their activities. On the other hand, the legal acknowledgment of freedom of trade(labor) union which was admitted in the level of administrarion in the &#039;20s, was failed by the abolition of Trade Union Act-Bill in 1931. Since then labor policy was transformed from acknowledgment of trade(labor) union to its restriction. Thus the rapid transformation of &#039;industrial discipline&#039; in the 1930s includes two phases: (1) Enlargement of restriction against &#039;freedom of trade and contract&#039; among firms, (2) Change of labor policy from cooperetive direction to compulsory direction. The purpose of this paper is to focus on phase (1), and further to reseach the development of industrial organization policy in the 1930s. By doing so, we shall clarify the legal and functional features of industrial organization policy in Japan at that time. Conclusions of the research are as follows: (1) Although government intervention in industrial oranization was a world-wide tendency in this period, feature of intervention in Japan is that legal restriction in regard to market mechanism went ahead of the change of macro economic policy. Another feature is the positiveness of intervention. This means that the purpose of intervention was not only restriction of cut-throat competition, but also setting up of industry with scale economy or external economy. (2) The above features are based on following three factors: First, it is the character of industrial structure that heavy industries had comparative disadvantage in the world market, thus could not establish in market mechanism. Second, it is the character of industrial organization that cartel was prevailed, but competition was still at work in small and medium firms. Thirdly, it is the social factor that public opinion was not critical enough to restrain the freedom of trade.

In 1931 the Law regarding the Control of Important Industries was enacted. Under this law the government, the Ministry of Commerce arid Industry was given powers, both to compel non-members of cartels to abide by cartel regulations and also to prevent any abuses of monopolistic power. The purpose of this paper is to make clear the administrative policy of this &quot;Law of Control&quot; and its revision in 1936. Some conclusions are as follows. (1) After 1933, when a trend of price increases began to appear, the administrative policy of government regarding &quot;Law of Control&quot; shifted from encouraging cartels during depression to protecting the public interest. In highly oligopolic Industries, such as paper, sugar and beer manufacturing, the government often supervised the productions, sales and prices policies of cartels. On the other hand, in competitive oligopolic Industries, such as carbide, and sulfuric acid manufacturing, the government intentionally maintained competition between cartel members and non-members, although cartel members demanded that the government compeled non-members to abide by cartel regulations. In the cement industry, which many new enterprises entered and existing companies invested in plant and equipment in spite of law rates of capacity utilization, the government intervened on the basis of the &quot;Law of Control&quot; with the aim of optimizing distribution of resources. (2) In terms of effect, the warnings of the government against highly oligopolistic Industries achived its aim. After this cartels began to hesitate in implementing price rises and production restrictions. At that time it should be noticed that the big businesses which led the cartel activities intended these low prices as a way to increase demand and to prevent new entries. But in the cement industry such intervention failed. Competition became greater in spite of intervention aimed at restricting competition and the enlargement of capacity by outsiders in Korea and new entries were not stopped. As a consequence of this the rate of capacity utilization became quite higher than before. (3) In 1936 the &quot;Law of Control&quot; was revised with the purpose of solveing the problems mentioned above. The points of revision were (i) to enlarge the enforcement district to Korea and Introduce regulations of new entries and investment in new equipment, and (ii) to apply the &quot;Law&quot; to the trusts which were established during recovery period. By this revision, the intervention of government became more positive and effective. But after the outbreak of the war with China in July 1937 the role of the &quot;Law of Control&quot; was gradually reduced because obstructive factors in cartel activities were no longer outsiders, but the lack of raw materials, and inflation made price manipulation by cartels ineffective. For this reason, government controls stronger and more derective than the &quot;Law of Control&quot; were urgently needed. Lastly we should &#039;mention that the intervention of the government on the basis of &quot;the Law of Control&quot; was a &quot;prototype&quot; for the Industrial policy of Ministry of Industry and Trade in the post-war period.

Tokuzo Fukuda (1874-1930), who was well known as one of the representative economists from the end of Meiji to early Showa, was also a preeminent thinker. He ceaselessly grasped the actual problems in this country and seeked to solve them. Fukuda as an intellectual was mainly concerned with the relationship between the state and capitalistic society through his life. His idea is centred on social reform by means of voluntary activities and associations of individuals, furthermore on the reconstruction of capitalist state based on the above mentioned social reform. His position may be defined as 'Social Liberalism' and his ideological brocess can be understood as cohesion to show the problems of liberalism in modern Japan. After W. W.I advanced nations faced with severe crisis of their political system, resulting in the case of Weimar Republic in a new system which became the origin of modern state. Japan was not an exception in this world-wide trend. A series of social reforms after W. W.I in Japan (revision of suffrage in 1925, a plan of Labour Union Law and Tenant Act) coincided with it. Fukuda in the 1920's fixed his eyes on these changes at home and abroad. Now he was in the face of difficult task. He had to advance his own 'Social Liberalism', opposing both (1) Socialism, which rapidly exerted influence on intellectual circles, and (2) collaborationism (kyochoshugi) which was adovocated as a new priciple of industrial relations instead of the old paternalism. The theory of 'struggle for welfare' and the 'welfare state theory' which were maintained in his famous writing 'Socialpolicy and class struggle' in 1921 were the products of his pursuit of this task. The former demonstrated the possibilities and necessities of labour movement by the theory of Alfred Marshall and Arthur Cecil Pigou. By reinterpreting 'Das soziale Konigtum' of Lorenz von Stein, the latter constructed the state theory, which appreciated the voluntary activities of workers and aimed at the improvement of their welfare. This essay brings Fukuda in the early 1920's into focus, and attempts to examine the originality and significance of his theories.

This paper deals with Tokuzo Fukuda (1874-1930), who was one of the representative economists from the end of Meiji to early Showa. He is also famous as a frontier of modern economics as well as a pioneer of the economic history in Japan (His work, &#039;Die wirtschaftliche und gesellschaftliche Entwicklung in Japan, Stuttgart, 1900&#039;, which was written under Lujo Brentano&#039;s direction, is the first scientific research for Japanese economic history). This paper, however, did not concern him as a scholar, but a thinker who grasped the actual problems in this country and seeked to solve them. Fukuda as an intellectual was concerned with the relationship between the state and the capitalist society through his life. His idea lied on the social reform by means of voluntary activities and associations of individuals, furthermore on the reconstruction of capitalist state based on the above social reform. His position may be defined as &#039;Social Liberalism (die soziale liberale Ideenrichtung)&#039;, used as self-definition by Lujo Brentano who had a great influence on Fukuda. In modern Japan the social policy, on the one hand, as in the case of Kumazo Kuwata (1868-1932) and Noboru Kanai (1865-1933) who were leaders and formed the right wing in &#039;the Society for Japanese social policy (Verein fur Sozialpolitik in Japan)&#039;, was based on the statism or ethical norm, on the other hand the liberalism tended to be argued as laissez faire so as to exclude the interference of the state. Under these intellectual conditions Fukuda who oriented himself to combine freedom and interference, and to join independent society and positive state occupied a very unique position. His ideological process can be understood to show the possibility and problems of liberalism in modern Japan. His ideological process can be divided into following three periods. (I).1900-1910 ; he theoretically depended on &#039;neue historische Schule&#039; of Germany and introduced its theory to Japan. In this period his problem-consciousness was the modernization of Japanese social and economic situation which was quite backward compare to western Europe. From this view point he advocated to enact Factory Law and abolish Rice Tariff and enlightened the necessities of entrepreneurship among Japanese capitalists. (II).1911-1920 ; he transfered his theoretical position to the neo-classical school (particularly of A.Marshall) and tried to study Marxist economic theory. Concerning the social policy he proposed the theory of &#039;the right to live&#039;, noticing the development of &#039;the liberal reform&#039; in England and the theory of Anton Menger (especially of his &#039;Das Recht auf den vollen Arbeitsertrag in gesellschaftlicher Darstellung. 1886&#039;) and committed himself to refine it. In this period he not only studied in his laboratry, but also participated in actual activities, and he organized &#039;Reimeikai&#039; (黎明会) with Sakuzo Yoshino (1878-1933) and became a leader of the &#039;Taisho Democracy&#039;. The influence of Fukuda as a thinker reached the peak in his life. (III).1921-1930 ; after the World War I the socialism rapidly exerted on intellectual circles and the government advocated the &#039;collaborationism (協調主義)&#039; as a new principle of industrial relations instead of the paternalism. With the intention of criticizing both these tendencies, he constructed a theory of the State, which appreciated the voluntary activities of workers and aimed at the improvement of their welfare by reinterpreting &#039;Das soziale Konigtum&#039; of Lorenz von Stein. This may be regarded as a pioneer of &#039;Welfare state therory&#039; in Japan. This essay mainly brings the second period into focus, and tries to examine the character of his theory of &#039;the right to live&#039; and its historical significance.

The purpose of this paper is to consider thougts of Tokuzo Fukuda (1874-1930), who was well known as a representative opinion leader between the end of the Meiji era to Taisho and to show characeristics of his economic liberalism. Fukuda had studied under Lujo Brentano (1844-1931) during his stay in Germany as a student. He belonged to the left wing in the Society for socialpolicy in Japan (Vereins fur Sozialpolitik in Japan). His economic thought in the end of the Meiji era be characterized by a combination of social liberism and 'a mode of thought influenced by historical school'. The former means the unity of two directions, a confidence in the principle of 'selfhelp' and a recognition of stateintervention. in the principle of 'selfhelp' and a recognition of stateintervention. The latter is summarized as a tendency to deduce justice and course of state-intervention from historical research. With this thought, he positively took part in the controversies over Factory Act and Corn Tariff. These problems were the main issues concerning the social conflict caused by industrization and the development of Japanese economy under the pressure of developed countries. This controversies were led by two groups, that is to say, Ukichi Taguchi (1865-1905). Kotaro Noritake (1867-1920) who insisted on the freedom of industrial relations and agriculture, and Noburu Kanai (1865-1933), Kumazo Kuwata (1868-1932), Tokiyoshi Yokoi (1860-1927) who adovocated protection of labour and peasant from the nationalistic standpoint. The particularity of Fukuda's contention, with which he intended to criticize both of them, lay on following points. 1) Fukuda paid full attention to pre-capitalistic relations in Japanese economy which had been neglected at all or considered as a pre-condition in their thought, and asserted to abolish feudalistic relations, to form modern industrial relations and to capitalize agriculture as a foundation of industrial development. To sum up, characteristics of his ideas were full capitalization of Japanese economy. 2) On the controversies he proclaimed the protection of labour by state and the freedom of agriculture from state. In a sense they might seem inconsistent, must be noticed that the protection of labour is deduced from a request for substantial equality between labourer and capitalist. That is to say, both of them are asserted from the viewpoint of the sole liberal principle. In these points we can see the originality of his economic thought that was different from simple laissez faire and nationlistic proctetionism.