Corporate Governance in Three Economies: Germany, Japan, and the United States

10 Pages Posted: 21 Oct 2008

See all articles by Robert M. Conroy

Robert M. Conroy

University of Virginia - Darden School of Business


This case examines the structure of corporate governance in three economies: Germany, Japan, and the United States. It presents the structure and background on the composition of corporate boards of directors and examines how corporate governance impacts on managerial decisions.



Rev. May 28, 2015

Corporate Governance in Three Economies:

Germany, Japan, and the United States


The basic structure of corporate governance is that there is a set of representatives selected by the stakeholders, who in turn select management to run the corporation. While the basic structure is the same, the manner with which it gets implemented varies from country to country. The variation is in how stakeholder is defined and in the relationship between the supervisory board and management. Part of those differences is cultural, but a large part is due to historical happenstance. For example, the role of banks as stakeholders varies internationally. In the United States, banks play almost no role in the corporate governance of firms. In Japan and Germany, however, banks are major players. A good part of this is due to the way banks were chartered in the United States by individual states and were prohibited from having branches in other states. In some cases, U.S. banks could only have branches in a limited area within a state. At one point just before the stock market crash in 1929, there were more than 17,000 commercial banks operating in the United States. Even in 1950, there were more than 14,000 commercial banks in the United States, while Germany had little more than 200, and Japan had only about 85. This lack of a national banking system made using bond and equity markets more attractive in the United States versus access to the large banks found in Germany and Japan, where banks provided most of the long-term financing. Consequently, banks play a much larger role in corporate governance in German and Japan than in the United States. Although this type of factor does not fully explain all the differences seen across markets, it does represent the kind of indirect influence that results from other types of decisions.

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Keywords: finance, corporate governance

Suggested Citation

Conroy, Robert M., Corporate Governance in Three Economies: Germany, Japan, and the United States. Available at SSRN: or

Robert M. Conroy (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States


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