Japanese Corporate Governance and the Market for Corporate Information Disclosure: What is the Role of Private Rights Enforcement?

Abstract

Dark side private ordering dominated the market for corporate disclosure in Japan for much of the last century. But from the 1990s, 20 years of corporate and securities law reform has resulted in the gradual transformation of Japanese corporate governance, shifting towards a shareholder model of governance and a growing level of external monitoring of the traditional insider Japanese company. Due to restraints in the public enforcement of disclosure rules, sokaiya face growing competition from the proliferation in shareholder derivative actions and private ordering by the Kabunuishi Onbuzman (Shareholder Ombudsman) and activist media groups like Facta. Independent directors and auditors were added to the market for corporate information in 2010 but their effectiveness is restricted by formal and informal constraints. This article examines the increasingly competitive market for corporate information and disclosure in Japan.

Keywords: corporate law, Japanese law, comparative law

JEL Classification: K22