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12 - Corporate Governance Reforms under Abenomics

The Economic Consequences of Two Codes

from Part IV - Third Arrow of Abenomics

Published online by Cambridge University Press:  05 February 2021

By
Hideaki Miyajima  and
Takuji Saito
Edited by
Takeo Hoshi  and
Phillip Y. Lipscy
Takeo Hoshi
Affiliation:
University of Tokyo
Phillip Y. Lipscy
Affiliation:
University of Toronto
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Summary

Corporate governance reform was one of the central issues in the “third arrow” of the Abe administration’s economic revival program. The Japanese Stewardship Code was introduced in 2014, followed by the Corporate Governance Code in 2015. This chapter quantifies how the reform changed the corporate governance of Japanese firms. Firstly, we examine the changes in institutional ownership, cross-holdings, and board structure following the reforms. Then we study whether changes in ownership structure and board structure affect the firm behavior and performance. We find that the introduction of the Stewardship Code is associated with more institutional ownership, especially in mid-sized firms. Firms with few outside directs increase the number of outside directors to follow the Corporate Governance Code. However, the increase in institutional ownership and outside directors do not promote risk-taking behavior and improve firm performance.

Keywords

corporate governanceJapanese firmsboard of directorsinstitutional investors
Type
Chapter
Information
The Political Economy of the Abe Government and Abenomics Reforms , pp. 357 - 393
Publisher: Cambridge University Press
Print publication year: 2021

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