'Outside' Intervention in Japanese Companies: its Determinants and Implications for Mangers

40 Pages Posted: 27 Dec 2006 Last revised: 13 Sep 2010

See all articles by Steven N. Kaplan

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Bernadette A. Minton

University of Chicago - Booth School of Business - Economics

Date Written: February 1993

Abstract

This paper estimates the determinants of appointments of 'outsiders' -- directors previously employed by banks or other non-financial firms -- to the boards of large (non-financial) Japanese companies. Appointments of both types of 'outsiders' increase with poor stock performance; those of bank outsiders also increase with negative current income. Appointments of bank outsiders are related to firm debt levels; those of corporate outsiders, to shareholder concentration and group affiliation, Both types of outsider appointments appear to be disciplinary -- top executive turnover increase substantially in the same year. Additional evidence on subsequent firm performance suggests that "bank" directors are appointed in financially distressed or contracting firms, while "corporate" directors are appointed in firms with temporary problems.

Suggested Citation

Kaplan, Steven Neil and Minton, Bernadette A., 'Outside' Intervention in Japanese Companies: its Determinants and Implications for Mangers (February 1993). NBER Working Paper No. w4276. Available at SSRN: https://ssrn.com/abstract=478714

Steven Neil Kaplan (Contact Author)

University of Chicago - Booth School of Business ( email )

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Bernadette A. Minton

University of Chicago - Booth School of Business - Economics

Graduate School of Business
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Chicago, IL 60637
United States

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