This thesis explores the interplay between global finance and remote firms and institutions. It highlights the interactions between global institutional investors and Japanese firms on environmental, social, and corporate governance (ESG) standards, and the process of change in Japanese corporate governance practices. It focuses on analysing the responses of large Japanese firms with a high level of foreign ownership to global finance and global institutional investors' strategies for engagement. Japan provides an excellent research environment for the topic. It is geographically and culturally remote from the West, and has the world's third largest economy with increasing foreign ownership on the Tokyo Stock Exchange. Under the influence of global finance, the Japanese economy has been in transition despite the persistence of its traditional institutions. There are many globally recognised Japanese firms, although certain firms have come under scrutiny in several recent corporate governance scandals. Recently, corporate reform has become one of the priority policy agendas, which has led to incremental convergence to global standards. The aims of this thesis are as follows: (i) to analyse the evolution of shareholder activism and corporate governance practices in ownership structure change (Chapter 3); (ii) to examine how global institutional investors privately engage with remote firms (Chapter 4); (iii) to explore the power of global investors in an industry with lower foreign ownership (Chapter 5); (iv) to analyse the perceptions of local firms towards global ESG standards under policy change (Chapter 6). The thesis revealed the following findings. First, global investors provide one of the only opportunities for ESG-related dialogues for local firms, in a country where local institutional investors are not active shareholders. Global finance has the power to transform local corporate governance practices by breaking down path dependence and institutional complementarities, although the status quo does persist. Second, local firms' norms and perceptions based on the existing institutions are culturally derived informal constraints, which slow down the change of corporate governance practices even after instrumental change. Third, the target firms of engagement activities are home-biased and limited to a small number of large global brand firms; hence, non-target firms and industries maintain their ESG standards unless policy reform occurs. Finally, local firms' unfamiliarity with engagement activities limits the power of global finance in a remote market. There is a gap between global institutional investors' motivation for engagement and Japanese firms' readiness to respond; hence, considered strategies and modes of communication are critical for effective engagement with remote firms, especially when language and organisational issues are present.

This dissertation considers the failure of the Japanese government from 1991 through late-1998 to take measures to bring swiftly under control the threat to the nation's finance system posed by nonperforming loans that arose with the collapse of the late-1980s land-price bubble. While some works plausibly argue that this record of delay, and a larger failure of the Japanese state to adjust its general economic policy strategy, can be attributed largely to a progressive fracturing of a 1950s consensus on basic economic policy objectives between relatively internationally competitive firms and firms more dependent on state protection of their business opportunities, this insight has led few scholars to enquire into the role played by advocates of the policy interests of Japan's most competitive large firms in producing the widely lamented policy of delay on nonperforming loans. Counter to the literature's preponderant emphasis on political pressure from protection-dependent firms as impediment to swift state adjustment to nonperforming loans and other economic policy challenges of the late-20th century Japanese state, this dissertation finds that state officials and expert commentators who in debates on nonperforming loans and closely related policy issues strongly advocated dismantling protections on which large numbers of firms depended and in their stead adopting policies more favorable to the firms best able to weather the harsh economic conditions of the 1990s, displayed willingness to tolerate further delay comparable to (and sometimes greater than) that shown by state officials and expert commentators who advocated greater solicitude for the protection-dependent. This finding is based chiefly on a reading of official Ministry of Finance policy statements, transcripts of hearings of relevant Japanese House of Representatives committees, public opinion polls, reporting and commentary published in two national-circulation and two local Japanese newspapers, and a variety of books and longer articles published in the mass-audience Japanese business press. This finding, I argue, suggests a need for more sustained critical analysis of the role of leading business interests in Japan's political processes, which in turn argues for a closer engagement than is now commonly attempted with the work of Karl Marx and Chalmers Johnson, and for following up some preliminary suggestions in the existing literature of an emergent economic policy dimension of Diet party competition. / text