Japanese Corporate Governance and Macroeconomic Problems

22 Pages Posted: 28 Jul 2000

See all articles by Masao Nakamura

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Date Written: April 2000

Abstract

Japan's prolonged economic problems are due to more than faulty macro-economic policies. We do not deny the importance of bungled macro-economic policy, but argue that deeper maladies in Japanese corporate governance made that country increasingly vulnerable to such problems. We argue that Japan's main bank and financial keiretsu systems left corporate governance largely in the hands of creditors rather than shareholders. Thus, Japanese governance practices did not assign effective control rights to residual claimants. This, we argue, led to a widespread misallocation of capital that mired Japan in excess capacity and liquidity problems.

JEL Classification: G34, E30

Suggested Citation

Nakamura, Masao and Morck, Randall K., Japanese Corporate Governance and Macroeconomic Problems (April 2000). Harvard Institute of Economic Research Paper No. 1893; Sauder School of Business Working Paper. Available at SSRN: https://ssrn.com/abstract=235758 or http://dx.doi.org/10.2139/ssrn.235758

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8434 (Phone)
604-822-8477 (Fax)

Randall K. Morck (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

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Edmonton, Alberta T6G 2R6
Canada
780-492-5683 (Phone)
780-492-3325 (Fax)

National Bureau of Economic Research (NBER)

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United States

European Corporate Governence Institute ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Asian Bureau of Finance and Economic Research ( email )

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1 Business Link
Singapore, 117592
Singapore

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