Policy Research Domains (Adjacent Basic Research Areas) A. Institutions Related to Financial and Labor Markets, and New Corporate Law and Governance

The Frontier of Corporate Governance Analysis: Economic Analysis of M&A and Corporate Governance

Project Leader/Sub-Leader


MIYAJIMA Hideaki Faculty Fellow




This project aims to examine the most urgent and crucial issues on corporate governance in Japanese firms. In this project, we will primarily focus on: the causes and effects of increasing foreign institutional shareholders and the unwinding of cross shareholding, redesigning a contingent governance structure following the collapse of the main bank system, clarifying the complementary or substitutional relationship between internal- and external- governance, the control over business units or subsidiaries following the introduction of the holding company system, the regulation of financial institutions, and the theoretical reexamination of the complementarity of the various sub systems involved in corporate governance. By examining these topics, we are expecting to comprehensively clarify corporate governance in Japan which is now characterized as the hybridization or rather combination of two different modes of relationships: market-based governance and relationship-based organizational structures. In this project, we also try to address the impact of the world financial crisis on the evolution of corporate governance in Japan. The research results of our team will be published by the end of autumn 2010.


As the result of macroeconomic environmental changes as well as rapid progress of deregulation and institutional reform in the second half of the 1990s, Japanese firms have participated in a large-scale experiment involving the transformation of their businesses, organizational structures and corporate governance. This has attracted keen attention both in Japan and overseas. This project, in the past, studied the actual status of governance structure reforms of Japanese firms and analyzed the impact of these changes on corporate performance. Japanese firms used to be characterized by their close ties with main banks, the cross-holding of shares, and inside directors. Nowadays, Japanese firms have come to rely more heavily on capital markets with regard to their external relations, while they maintain the features of the Japanese model in their internal structures. In this sense, Japanese firms have begun to move toward a hybrid structure, which was the point most emphasized in our findings. Based on this finding, the aim of this project during fiscal 2007 will be the following issues that previously were not fully studied.

  • (1) Theoretical re-examination of institutional complementarity
  • (2) Theoretical re-examination of owning stocks and empirical study of cross-holding of shares
  • (3) Significance of public listing and the economic functions of publicly listed subsidiaries
  • (4) Re-examination of condition-dependent governance
  • (5) Interrelation of business portfolios, decentralization and corporate governance
  • (6) Role of inter-firm competition as a precondition for autonomous governance and internal governance

While focusing on these issues, this project will seek to develop new methodologies for empirical analysis and to develop data needed for such approaches. Finally, this project will attempt to open new research frontiers in corporate governance with strong policy implications.

November 2, 2007 - April 30, 2009

Major Research Results


MFJ-RIETI-WASEDA International Conference

Project URL


RIETI Discussion Papers

Project URL