Where is Corporate Governance in Japan Heading? Evidence from a survey of Japanese listed companies

RIETI recently conducted a comprehensive survey on corporate governance in Japan. It covers various topics concerning corporate governance and managerial practices such as managerial objectives, cross-shareholding, responses to shareholder's activism and hostile takeovers, executive compensation and nomination, board structure, and employee participation. We find that Japanese companies have increasingly taken shareholders interest more seriously, while stakeholders' interests were also still highly considered. In contrast from conventional wisdom, Japanese firms regard the interests of both shareholders and stakeholders as not substitutive, but as compatible. They try to rebalance both interests through various experiments. The survey results enabled us to understand the extent to which corporate governance arrangement and managerial practices in Japanese firms have changed, what kind of characteristics they have at present, and where they are headed. The results of the survey also provide some policy implications for future corporate governance reforms in Japan.