This study examines the significance of corporate governance mechanisms during the corporate governance reform using a sample of 117 non-financial Japanese firms listed on the Tokyo Stock Exchange over the period 1989 to 2001. Japans prolonged recession brought about numerous reforms in post-bubble Japan. Although it is plausible to infer that the corporate governance system in Japan may have been a factor that led to the sustained recession in Japan, it is vague as to how deep and thorough the changes to Japanese corporate governance have been. The inference is that adverse impact of corporate governance may have been one of the factors that led to the sustained recession in Japan. Numerous proposals have been offered and some implemented in an attempt to fix problems exposed during the recession period in the 1990s. Remedies include instituting reforms to corporate governance by establishing new standards, punishing malpractice, and changing corporate board structures. Many Japanese firms look abroad for alternate governance mechanisms to integrate into their own system of control. As such, most reforms propose changes, for the most part, reflecting the American-style of corporate governance: alignment in incentives between top management and shareholders, board size reductions, and greater board independence to promote better monitoring and firmer discipline. <p>The significance of proposed changes to traditional Japanese corporate governance is examined in this study. Using a different econometric approach from that of previous studies, the relationship between board composition and firm performance is examined with a simultaneous framework of equations. The purpose of this empirical framework is to tackle potential endogeneity problems between board composition, governance and performance variables. Results show that: (1) there exists a significantly negative relationship between turnover of members of the board of directors and firm performance; (2) board size reduction is significant, but there is no evidence of consistent relationship between outside directorship and firm performance. (3) While keiretsu membership is generally relevant in linking board turnover and performance in Japan, board turnover is sensitive to performance in firms where ownership is concentrated than where ownership is dispersed. (4) President turnover, whether routine or non-routine, is unrelated to performance. Overall, results support that the entire board assumes responsibility for the firms performance and the 2SLS model is an effective estimator for estimating the relationship between board composition and firm performance.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:SSU.etd-04272007-233036 |
| Date | 30 April 2007 |
| Creators | Tang, Linda |
| Contributors | Vaidyanathan, Ganesh, Tannous, George, Racine, Marie, Mathew, Prem, Yildirim, H. Semih |
| Publisher | University of Saskatchewan |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://library.usask.ca/theses/available/etd-04272007-233036/ |
| Rights | unrestricted, I hereby certify that, if appropriate, I have obtained and attached hereto a written permission statement from the owner(s) of each third party copyrighted matter to be included in my thesis, dissertation, or project report, allowing distribution as specified below. I certify that the version I submitted is the same as that approved by my advisory committee. I hereby grant to University of Saskatchewan or its agents the non-exclusive license to archive and make accessible, under the conditions specified below, my thesis, dissertation, or project report in whole or in part in all forms of media, now or hereafter known. I retain all other ownership rights to the copyright of the thesis, dissertation or project report. I also retain the right to use in future works (such as articles or books) all or part of this thesis, dissertation, or project report. |
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