Corporate Governance Convergence Practice in Japan

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Corporate governance convergence practice in Japan

Introduction
In recent years, there are a number of literatures with regard to the debatable and inevitable convergence in the corporate governance practices (Yoshikawa & Rasheed, 2009). In general, corporate governance convergence relate to the models of corporate governance, in which merge in practices and theoretical views especially at national or multinational level (West, 2009). West (2009) also stated that the completely convergence which represent the differences between various countries would disappear and a universal corporate governance would be used widely in the end. However, Hansmann and Kraakamn (2001) claimed that the corporate laws and practices are all converging to the ‘shareholder value maximization model’ nowadays (Hansmann & Kraakamn cited in Yoshikawa & Rasheed, 2009). On the other hand, a number of researches argued that the convergence is difficult to bring into the corporate governance (Bebchuk et al. cited in Yoshikawa & Rasheed, 2009). There were several studies implied that local economic institutions try to adjust themselves for adaptation of the foreign practices, yet Pieterse (1994) argued that this phenomenon would result in ‘hybridization’, rather than ‘convergence’ (Yoshikawa & Rasheed, 2009). Even though there are considerable controversies in the convergence of corporate governance, the huge changes which already occurred in corporate governance system in all major industries and emerging counties recently (Yoshikawa & Rasheed, 2009). In recent decades, Japanese corporate governance has been researched and discussed comprehensively (Yoshikawa & McGuire, 2008). In addition to that Japan is the third largest economy in the world and its GDP at $5.5 trillion accounts for 8.7% of global GDP (Nanto et al., 2011), Japanese corporate governance model differ from American and European models (Yoshikawa & McGuire, 2008; Aguilera & Cuervo-Cazurra, 2009; West, 2009). Nevertheless, Yoshikawa and McGuire (2008) argued that the appraisals of the corporate governance are various which depend on the increase or decrease of the Japanese economy. For instance, the Japanese corporate governance was regarded as the advantage of nation’s competitiveness when the Japanese economy was prosperous which before 1990 (Porter cited in Yoshikawa & McGuire, 2008). In contrary, the Japanese corporate governance was accused for the reason of the economic recessions in Japan since 1990 (Watanabe & Yamamoto cited in Yoshikawa & McGuire, 2008). Even though the earthquake and tsunami occurred in Japan on March 11, 2011 that definitely result in a huge negative influence on the Japanese economy (Nanto et al., 2011). The study would not discuss the effects on Japanese economy or corporate governance; it would emphasis on the development of Japanese corporate governance as institutional change.

The studies on codes of good governance have increasing prominence since the issuance of UK Cadbury in 1992. Not only companies but also countries are keen to make their corporate governance practices more successful (Aguilera & Cuervo-Cazurra, 2009). Yet, codes of good governance unfolded worldwide as a result of the international organizations such as the World Bank and the OECD (Organization for Economic Cooperation and Development) which improve the institutions and assist countries especially in corporate governance (Aguilera & Cuervo-Cazurra, 2009). In addition, these transnational institutions see the good corporate governance as the required condition for the growth of the nations, and they provide the best corporate governance practices which include country level and firm level for their member nations to adopt (Aguilera & Cuervo-Cazurra, 2009). Although the widely spread of corporate governance is impressive, the details in the codes are different in different countries. Therefore, it is important to study the diffusion of codes of good governance across...
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