Japan’s Gradual Transformation
Edited by Luke Nottage, Leon Wolff and Kent Anderson
Chapter 5: Corporate Governance and Closely-held Companies in Japan: The Untold Story
Tomoyo Matsui* Most of the English literature on Japanese corporate governance focuses on large, publicly listed companies. For example, the current debate over the erosion or the endurance of the ‘J-firm’ – characterised by boards of internally promoted directors, main bank monitoring, keiretsu cross-shareholding arrangements, low-level M&A activity and lifelong employment (Aoki, 1988) – revolves around governance features typically observed in large-scale, publicly listed and internationally renowned corporations. Yet listed companies account for only a fraction of all business enterprise in Japan. As of 30 November 2007, there were 4,000 companies listed on one of Japan’s six stock exchanges.1 By contrast, surveys by the Ministry of International Affairs and Communication (MIAC), 2004a; 2004b) show that there are over 5 million unincorporated businesses across the country, 2.86 million of which own offices or factories. A survey of taxation records by the National Tax Agency (NTA, 2005) reveals that there are 2.59 million incorporated entities. Of these, 1.45 million are private, closely-held (or ‘limited liability’) companies (yugen kaisha)2 and a further 1.04 million are companies limited by shares (or ‘joint stock’ corporations, kabushiki kaisha). Although these statistics derive from surveys conducted at different times and with * Research for this chapter was supported by and completed during a Japan Society for the Promotion of Science (JSPS) Postdoctoral Fellowship for Research Abroad. 1 According to the public websites of the relevant exchanges, 2,409 companies are listed on the Tokyo Stock Exchange, 1,065 on the Osaka Stock Exchange, 976 on JASDAQ, 392...
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