The Frontier of Corporate Governance Analysis: Toward the recovery of Japanese companies' competitiveness (corporate governance, strategic choice and performance)

This research group has so far continued to work on a theoretical and empirical analysis of corporate governance, through which it has been revealed that Japanese companies have greatly diversified from their former homogeneous structure and that their evolution is characterized by a hybrid pattern of corporate governance that combines the two different systems of the economic institution; the market-oriented system and the relation-based system. It has also been revealed that, while companies having a hybrid structure have maintained high performance, those companies are undergoing the process of trial and error in their own reform and that hybridization can entail considerable adjustment costs. While we will continuously tackle the critical task of analyzing current changes in the corporate governance arrangement (the Company Law amendment, board reforms, redesign of compensation scheme, ownership changes, and the characteristics of the market for corporate control), this project is intended to further expand the above tasks in order to proceed with an analysis of the relation between corporate governance characteristics and corporate organizations and strategies, for the purpose of redesigning corporate governance to facilitate a recovery in Japan's competitiveness.

Existing empirical studies have scarcely paid attention to the transmission mechanism that shows how corporate governance characteristics affect corporate performance. This project thus aims at a comprehensive analysis of corporate governance characteristics, management strategies, and corporate performance. Based on quantitative and qualitative information concerning the financial policy as well as the organizational and business strategies of firms, new variables will be created concerning management strategies and organizations. These variables will be used to examine (i) the impact which a particular management strategy or organizational choice has on corporate performance, (ii) which factors of corporate governance characteristics determine the choice of a particular managerial and organizational strategy and to what extent, and (iii) the mutual (causal) relation among corporate governance, corporate strategies, and corporate performance.

April 1, 2011 - March 31, 2013