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Financial Malaise and the Myth of the Misgoverned Firm

J. Mark Ramseyer

Harvard Law School

Yoshiro Miwa

Osaka Gakuin University

October 2001

Harvard Law and Economics Discussion Paper No. 335

For nearly a decade now, the specter of financial malaise has haunted East Asia. It overwhelms the weaker economies. It imperils North America. Persistently, it refuses to retreat.

Yet even as the specter teases entrepreneurs with insolvency, some observers suggest that responsibility might lie with the entrepreneurs themselves. Might not the source of the malaise lie in the very governance structures they created and maintain, particularly in the shareholding and board composition patterns they support? Might not its solution lie in legal reforms that would force them to remake those structures?

To examine these questions, we consider the governance arrangements at the heart of the malaise: in corporate Japan. Theoretically, we find nothing to suggest that the source of the recession lies in issues of corporate governance, and nothing to suggest that the solution lies in corporate law reform. We then assemble data from the banking industry - one of the sectors most badly struck by the financial crisis. Empirically, we find nothing to suggest that the contested governance structures explain the poor performance of the banks involved.

Number of Pages in PDF File: 29

JEL Classification: G21, G32, G34, K22

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Date posted: November 13, 2001  

Suggested Citation

Ramseyer, J. Mark and Miwa, Yoshiro, Financial Malaise and the Myth of the Misgoverned Firm (October 2001). Harvard Law and Economics Discussion Paper No. 335. Available at SSRN: http://ssrn.com/abstract=290795 or http://dx.doi.org/10.2139/ssrn.290795

Contact Information

J. Mark Ramseyer (Contact Author)
Harvard Law School ( email )
1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-4878 (Phone)
617-496-6118 (Fax)
Yoshiro Miwa
Osaka Gakuin University ( email )
2-36-1 Kishibe-Minami
Suita, Osaka 5645811
Feedback to SSRN

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