Corporate Finance and Governance: Japan-Europe Comparisons

Changes in the macroeconomic environment, combined with rapid advances in deregulation and systematic reform since the second half of the 1990s, are causing large-scale shifts in the governance structures of Japanese corporations, which have followed a distinctly "Japanese model" until recently. Changes have been particularly pronounced in terms of share ownership. This, in turn, has spurred rapid progress in board reform, centering on the appointing of more outside directors in place of directors promoted from within the company. Also, with the recent growth in mergers and acquisitions (M&A), a market for managerial control is forming.

The United States is frequently cited as an example of actual reform in corporate governance, or as a model for such reform, but little is known in Japan about the state of corporate governance reform in EU countries. Corporate governance in the EU is often characterized as stakeholder-based and it has many features in common with Japan, such as ownership structures, company-bank relationships, composition and functions of boards of directors, and the degree of employee involvement in management. As mature economies, the EU and Japan share many problems with regard to corporate governance. There are also many parallels in the way the recent increase in M&A has begun to influence corporate governance systems in the two economies.

In light of these developments, RIETI and the Centre for Economic Policy Research (CEPR), one of Europe's leading economic research institutions, are jointly hosting a conference to gain a more accurate understanding of the state of Japan's corporate governance system, to assess changes to this system, and to examine the future direction of reform based on a comparison with EU countries.

The first part of the conference, on September 13th and the morning session of September 14th, will be aimed at a largely academic audience. Japanese and European researchers will present papers examining corporate governance in Japan and Europe. The second part, on the afternoon of September 14th, will be an open symposium aimed at a wider audience. Leading Japanese and European researchers will give keynote presentations on the state of corporate governance in Japan and the EU. They will then be joined by policymakers and businesspeople for a deeper debate on models of corporate governance under the current M&A boom.