[...]... generated by the investment of stakeholders in developing and maintaining Wrm-speciWc capabilities Corporate governance has played an important role in facilitating these long-term investments and promoting cooperation, representing an important alternative to the US model (Aoki 1988; Porter 1990) Here we outline the main institutional features of corporate governance in Japan in three broad areas: corporate. .. ‘‘lost decade,’’ Japan has reached a major turning point in its post-war business history As suggested by the title of the book, we see this process of institutional change as being tightly linked to a growing diversity of corporate governance practices across Wrms In developing this answer, section 1.1 begins by brieXy introducing the main characteristics of corporate governance in Japan Section 1.2... listing in 2002, three listing in 2001, one listing and one delisting in 2000 7 We are indebted to Darrell Whitten for these observations Change of Corporate Governance in Japan 13 Meanwhile, large corporations could increasingly raise external funds by directly issuing corporate bonds, and often used these funds to write oV or reWnance bank loans Bonds became increasingly attractive in Wnancing international... crossshareholding will remain a diverse mix of stable shareholding and ownership by institutional investors Foreign and Institutional Investors As stable shareholding and bank–Wrm relations weaken, institutional investors are becoming more important In Chapter 4, Christine Ahmadjian examines the impact of foreign institutional investors on various aspects of corporate governance and corporate restructuring In. .. their business portfolios, as reXected in the high level of both entry and exits from lines of business Third, mature Wrms in stagnant or declining industries have undergone major corporate restructuring and consolidation Large and mature Wrms, such as Hitachi or Matsushita, have increasingly decentralized their business Change of Corporate Governance in Japan 15 decisions by introducing so-called in- house... restructuring Delay in entering new business areas Delay in restructuring Change of Corporate Governance in Japan 9 employment and seniority wages contribute to investment in Wrm-speciWc skills, but potentially hinder or delay needed restructuring The insider-dominated board structure and managerial career patterns assure the continuity of business policies and long-term view, but also favour business... agencies Since the late 1990s, foreign direct investment emerged as a key policy priority in Japan aimed at revitalizing the economy Here corporate governance reform was intended to promote international investment by facilitating M&A, privatizing government business, or liberalizing the use of stock options that foreign Wrms used as incentives to attract qualiWed staV FDI into Japan did increase,... investor relation’s oYcers Ahmadjian stresses the combined role of informal voice and threat of exit, which exert pressure in less direct but nonetheless powerful ways Japanese Wrms are improving disclosure in response to investors, and a two-way dialogue is emerging, wherein management must increasingly consider the types of issues raised by foreign investors Using the Japan Corporate Governance Index... venture capital business, the authors are optimistic for the future potential of VC in Japan Bankruptcy In Chapter 6, Peng Xu turns to issues related to corporate governance in Wrms facing severe Wnancial distress and on recent changes in the process of bankruptcy, in particular In the past, contingent governance by Japanese main banks meant that banks had a wide scope for intervening to rescue Wrms... transactions increased from 252 per year in 1991–97 to 1381 deals annually in 1998–2005 Their value increased from 0.4% to 2.5% of GDP during those same periods While M&A in Japan remains behind other large OECD countries, this increase represents a massive change for Japanese Wrms While many M&A transactions remain within traditional corporate groups, poorly performing Wrms have been targeted in M&A transactions . of institutional change as being tightly linked to a growing diversity of corporate governance practices across Wrms. In developing this answer, section 1.1 begins by brieXy introducing the main. by the investment of stakeholders in developing and maintaining Wrm-speciWc capabilities. Corporate governance has played an important role in facilitat- ing these long-term investments and promoting. Corporate governance is also viewed as being embedded within various institutional rules and beliefs that shape how these stakeholders interact in corporate decision-making—including corporate