Financial Malaise and the Myth of the Misgoverned Firm

29 Pages Posted: 13 Nov 2001

See all articles by J. Mark Ramseyer

J. Mark Ramseyer

Harvard Law School

Yoshiro Miwa

Osaka Gakuin University

Date Written: October 2001


For nearly a decade now, the specter of financial malaise has haunted East Asia. It overwhelms the weaker economies. It imperils North America. Persistently, it refuses to retreat.

Yet even as the specter teases entrepreneurs with insolvency, some observers suggest that responsibility might lie with the entrepreneurs themselves. Might not the source of the malaise lie in the very governance structures they created and maintain, particularly in the shareholding and board composition patterns they support? Might not its solution lie in legal reforms that would force them to remake those structures?

To examine these questions, we consider the governance arrangements at the heart of the malaise: in corporate Japan. Theoretically, we find nothing to suggest that the source of the recession lies in issues of corporate governance, and nothing to suggest that the solution lies in corporate law reform. We then assemble data from the banking industry - one of the sectors most badly struck by the financial crisis. Empirically, we find nothing to suggest that the contested governance structures explain the poor performance of the banks involved.

JEL Classification: G21, G32, G34, K22

Suggested Citation

Ramseyer, J. Mark and Miwa, Yoshiro, Financial Malaise and the Myth of the Misgoverned Firm (October 2001). Available at SSRN: or

J. Mark Ramseyer (Contact Author)

Harvard Law School ( email )

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

Yoshiro Miwa

Osaka Gakuin University ( email )

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

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