Corporate governance of Japanese banks
Christopher W. Andersona,*, Terry L. Campbell IIb
a School of Business, University of Kansas, 1300 Sunnyside Avenue, Lawrence, KS 66045, USA
b College of Business and
Economics, University of Delaware, Newark, DE 19716, USA
Received 10 July 2002; accepted 7 October 2002
AbstractWe investigate external and internal corporate governance activity observed at Japanese banks
代写留学生论文over 1985–1996. External governance appears to be inactive, and even after the onset of the banking
crisis of the 1990s there are few mergers, failures, and other changes in ownership and control. Prior
to the banking crisis we do not find a relation between bank performance and executive turnover. In
contrast, non-routine turnover of bank presidents is inversely related to both stock returns and
profitability in the 1990s. Consequently, internal governance activity is observable following the
onset of the Japanese banking crisis, a period otherwise characterized by inactive external
governance and regulatory forbearance.
D 2003 Elsevier B.V. All rights reserved.
JEL classification: G21; G34
Keywords: Japanese banks; Banking crisis; Managerial turnover; Corporate governance
1. Introduction
The banking sector plays a prominent role in the Japanese economy. For much of the
post-war period, banks were the predominant source of external financing for Japanese
firms and anchored a governance system characterized by relationships among firms
belonging to keiretsu corporate groups (Aoki et al., 1994). The Japanese financial system
experienced significant changes in the 1980s and 1990s, however. Important changes in
the operating environment of Japanese banks include a shift by large Japanese firms
toward financial markets for external financing, globalization, the collapse of asset prices
in the 1990s, deterioration of banks’ financial health, a subsequent decade of meager
growth, and a decline of the keiretsu system (Hoshi and Kashyap, 1999, 2001).
0929-1199/$ - see front matter D 2003 Elsevier B.V. All rights reserved.
doi:10.1016/S0929-1199(03)00029-4
* Corresponding author. Tel.: +1-785-864-7340.
E-mail address: cwanderson@ku.edu (C.W. Anderson).
www.elsevier.com/locate/econbase
Journal of
Corporate Finance 10 (2004) 327– 354
The prominence of banks in the Japanese economy and the frequent linking of banksector
health to the overall economy suggest that corporate governance of Japanese banks
themselves is an important topic for research. However, in contrast to the many studies of
the implications of Japanese-style corporate governance for non-financial firms, there are
conspicuously few studies that investigate corporate governance of Japanese banks per se.
Consequently, there is little evidence on the extent to which governance of Japanese banks
contributed to, exacerbated, or responded to the banking crisis.
This study investigates governance activity at more than 100 Tokyo Stock Exchangelisted
Japanese banks for the 12-year period 1985–1996. We divide the sample period into
a pre-crisis period characterized by growth, profitability, and positive stock-price performance
and a crisis period characterized by stagnation, poor profitability, and stock-price
depreciation. For both periods we examine ownership structure, control activity, topexecutive
turnover, and bank performance.
We first investigate external
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