Corporate Governance and Transparency in Japan
31 Pages Posted: 1 Jul 2011 Last revised: 7 Aug 2020
Date Written: August 5, 2020
Corporate governance (CG) reformists typically presume better-governed companies are more transparent to investors. We focus on CG and transparency in Japan, where CG has been an ongoing issue. Using local ratings of Japanese companies’ CG, and data on corporate disclosures and their associated stock returns, we do find better-governed Japanese companies have made more frequent and timelier disclosures, and that their share prices have reflected value-relevant information earlier. While these results hold for good news, they do not hold for bad. Consequently, governance guidance in Japan may not have resulted in both timelier and more balanced release of newsworthy information.
Keywords: Corporate Governance; Transparency; Disclosures; Price Discovery; Timeliness
JEL Classification: C26; G34; G39
Suggested Citation: Suggested Citation