'Outside' Intervention in Japanese Companies: its Determinants and Implications for Mangers
Steven N. Kaplan
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
Bernadette A. Minton
University of Chicago - Booth School of Business - Economics
NBER Working Paper No. w4276
This paper estimates the determinants of appointments of 'outsiders' -- directors previously employed by banks or other non-financial firms -- to the boards of large (non-financial) Japanese companies. Appointments of both types of 'outsiders' increase with poor stock performance; those of bank outsiders also increase with negative current income. Appointments of bank outsiders are related to firm debt levels; those of corporate outsiders, to shareholder concentration and group affiliation, Both types of outsider appointments appear to be disciplinary -- top executive turnover increase substantially in the same year. Additional evidence on subsequent firm performance suggests that "bank" directors are appointed in financially distressed or contracting firms, while "corporate" directors are appointed in firms with temporary problems.
Number of Pages in PDF File: 40working papers series
Date posted: December 27, 2006
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