Japan’s Paradoxical Response to the New ‘Global Standard’ in Corporate Governance

Abstract

I.   Introduction
II.   Methods
III.   Corporate Responses to Company Law Reform: Case Study Evidence
1.   Varieties of Board Structure in Companies with Committees
2.   Perspectives on External Directors and Corporate Auditors
3.   The Impact of Governance Reform on Management Structures and Practices
4.   Reaction to the Increased Possibility of Hostile Takeover Bids
IV.   Assessment and Conclusion

We suggest, on the basis of empirical research into the implementation of recent legal reforms, that Japan is not moving inexorably towards a ‘global standard’ in corporate governance, based on external monitoring and a market for corporate control. The traditional system is nevertheless changing:  in  part  as  an  indirect  response  to  legal  initiatives,  new  structures  and  practices  are emerging, aimed at providing greater flexibility indecision-making, while retaining the organisational  core  of  the  Japanese  firm.  The  paradoxical  effect  of  legal  reforms  aimed,  in  large  part, at  transplanting  the  global  standard,  may  be  to  renew  the  distinctive  Japanese  model  of  the
corporation.