The 'Company with Committees': Change or Continuity in Japanese Corporate Governance?

摘要

Corporate governance practices are arguably diffusing across the world. This paper examines the adoption of the committee-based governance system (i.e. audit, nomination, and remuneration) in Japanese firms, a practice common in Anglo-American capitalism but potentially contestable in Japan. The study finds that firms that are internationally exposed through cross listing are more likely to adopt the committee system. Moreover, more experienced and highly cross-held firms, with larger proportions of foreign ownership, are more likely to adopt the committee system. On the other hand our study finds partial support for the hypothesis that larger proportions of bank ownership are negatively associated with the adoption of the committee system, suggesting a gradual withdrawal by banks from the traditional monitoring of firms. This paper adds to the longstanding debate on the convergence on or persistent divergence from the Anglo-American corporate governance system. The study thus provides insights into corporate governance changes in non-Anglo/American countries that face a struggle between global capital market forces for change and deep-seated institutional practices of continuity.