Appointments of Outsiders to Japanese Boards: Determinants and Implications for Managers

Posted: 10 Aug 1999

See all articles by Steven N. Kaplan

Steven N. Kaplan

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); University of Chicago - Polsky Center for Entrepreneurship

Bernadette A. Minton

Ohio State University (OSU) - Department of Finance

Date Written: February 1994

Abstract

This paper investigates the determinants of appointments of outsiders -- directors previously employed by banks (bank directors) or by other nonfinancial firms (corporate directors) -- to the boards of large nonfinancial Japanese corporations. Such appointments increase with poor stock performance; those of bank directors also increase with earnings losses. Turnover of incumbent top executives increases substantially in the year of both types of outside appointments. We perform a similar analysis for outside appointments in large U.S. firms and find different patterns. We conclude that banks and corporate shareholders play an important monitoring and disciplinary role in Japan.

JEL Classification: G32. G21, D23

Suggested Citation

Kaplan, Steven Neil and Minton, Bernadette A., Appointments of Outsiders to Japanese Boards: Determinants and Implications for Managers (February 1994 ). Available at SSRN: https://ssrn.com/abstract=5454

Steven Neil Kaplan (Contact Author)

University of Chicago - Booth School of Business ( email )

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University of Chicago - Polsky Center for Entrepreneurship

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Bernadette A. Minton

Ohio State University (OSU) - Department of Finance ( email )

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United States
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