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The Myth of the Main Bank: Japan and Comparative Corporate Governance

19 Pages Posted: 26 Sep 2001  

Yoshiro Miwa

Osaka Gakuin University

J. Mark Ramseyer

Harvard Law School

Date Written: September 2001

Abstract

In this essay on Masahiko Aoki's recent study of Japanese corporate governance, we argue that he and others misdescribe Japan on several fundamental dimensions. First, Japanese firms and employees choose neither to arrange implicit life-time employment contracts nor to invest heavily in firm-specific skills. Instead, firms keep employees employed during economic downturns only because interventionist courts do not let them lay their employees off. Second, Japanese firms do not organize themselves into keiretsu corporate groups, do not exchange shares with other alleged group members, and do not necessarily use the money-center bank attributed to the group as their "main bank." Last, Japanese "main banks" neither agree in advance to rescue troubled debtors nor monitor firms on behalf of other creditors.

JEL Classification: G21, G32, K22, O53

Suggested Citation

Miwa, Yoshiro and Ramseyer, J. Mark, The Myth of the Main Bank: Japan and Comparative Corporate Governance (September 2001). Harvard Law and Economics Discussion Paper No. 333. Available at SSRN: https://ssrn.com/abstract=285254 or http://dx.doi.org/10.2139/ssrn.285254

Yoshiro Miwa (Contact Author)

Osaka Gakuin University ( email )

2-36-1 Kishibe-Minami
Suita, Osaka 5645811
Japan

J. Mark Ramseyer

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-4878 (Phone)
617-496-6118 (Fax)

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