International Corporate Governance
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International Corporate Governance

A Case Study Approach

Edited by Christine A. Mallin

Corporate governance has become a global phenomenon. This book highlights, through various case studies, how corporate governance has evolved in a number of countries around the world. The international cast of contributors, from varying professional backgrounds including academics, lawyers and company directors, focus on different regions around the globe, reflecting various ownership structures, legal systems, and political and cultural aspirations. Some of the case studies used include: Standard Life; Telecom Italia; and Eskom.
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Chapter 10: Will the Japanese Corporate Governance System Survive? Challenges of Toyota and Sony

Megumi Suto and Motomi Hashimoto

Extract

10. Will the Japanese corporate governance system survive? Challenges of Toyota and Sony Megumi Suto and Motomi Hashimoto INTRODUCTION For the ten years since the end of 1989 after the Bubble burst, the ‘missing ten years’, Japanese companies were exposed to prolonged economic depression and financial distress, and there was a sort of a vacuum in corporate governance mechanisms due to the retreat of the main bank system and the erosion of tight business relations supported by cross-shareholdings. A comprehensive reform plan of the Japanese financial system, known as ‘Financial Big Bang’, started in 1996, calling for revitalization of the capital market, liberalization in various financial businesses including asset management and banking, strengthening of a sound banking system and increasing transparency of the capital market, aiming to promote a free and fair system competitive with global standards. Since the end of the 1990s, shareholders’ activism gradually emerged among institutional investors. Some public pension funds and several leading corporate pensions have become increasingly sensitive about the execution of voting rights from a viewpoint of fiduciary responsibility. A rapidly ageing society pressed the institutional investors towards improvement in investment performance of the pension funds and such pressures will likely further accelerate shareholders’ activism. In these changing corporate circumstances, the general view on corporate governance that decision-making of companies should be left to professional managers was questioned and a new view to seek independent external monitoring has been gradually but broadly spread in Japan. Some of the big companies began to adopt the...

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