Abstract

http://ssrn.com/abstract=1636557
 
 

Footnotes (62)



 


 



Learning from Toyota’s Troubles: The Debate on Board Oversight, Board Structure, and Director Independence in Japan


Bruce E. Aronson


Hitotsubashi University Graduate School of International Corporate Strategy

February 16, 2011

Journal of Japanese Law, Vol. 15, No. 30, 2010

Abstract:     
This Article considers the potential significance of Toyota’s recent troubles for Japanese corporate governance by examining two sets of issues. First, it looks at the relevant fiduciary duty of Toyota’s directors, i.e., the general duty of oversight in Japan as set forth in case law in the Daiwa Bank shareholder derivative litigation (2000) and the related subsequent statutory duty to establish a system of internal controls provided in the Companies Act (2005). Potential director liability would depend on the filing of a shareholders derivative suit and the discovery of facts which show director’s negligence in devising, implementing, and monitoring specific measures to carry out the board’s existing overall policy on internal controls.

Second, it considers the Toyota case in light of the ongoing debate in Japan during the last decade between competing board structures: the traditional company auditor (kansayaku) structure with no required outside directors and the newer alternative board committee structure with a required majority of outside directors. The potential role of independent directors remains controversial and is currently the hottest topic in Japanese corporate governance. The recent failures of Toyota, a highly successful champion of the traditional Japanese governance system, might help make Japan more receptive to calls by international and domestic institutional investors to take measures to increase board independence.

Number of Pages in PDF File: 21

Keywords: corporate governance, comparative law, Japan, independent director, oversight, Toyota

JEL Classification: K22

Accepted Paper Series





Download This Paper

Date posted: July 9, 2010 ; Last revised: August 4, 2011

Suggested Citation

Aronson, Bruce E., Learning from Toyota’s Troubles: The Debate on Board Oversight, Board Structure, and Director Independence in Japan (February 16, 2011). Journal of Japanese Law, Vol. 15, No. 30, 2010. Available at SSRN: http://ssrn.com/abstract=1636557

Contact Information

Bruce E. Aronson (Contact Author)
Hitotsubashi University Graduate School of International Corporate Strategy ( email )
2-1-2 Hitotsubashi, Chiyoda-ku
Tokyo 101-0003, Chiyoda-ku 101-8439
Japan
81-3-4212-3138 (Phone)
81-3-4212-3149 (Fax)
HOME PAGE: http://www.ics.hit-u.ac.jp
Feedback to SSRN


Paper statistics
Abstract Views: 1,601
Downloads: 427
Download Rank: 37,908
Footnotes:  62

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.297 seconds