Corporate Governance and Law Reform in Japan: From the Lost Decade to the End of History?

56 Pages Posted: 19 Oct 2005

See all articles by Luke R. Nottage

Luke R. Nottage

The University of Sydney Law School; The University of Sydney - Australian Network for Japanese Law

Leon Wolff

Queensland University of Technology - Faculty of Law

Date Written: 2005

Abstract

Japan is in the midst of massive law reform. Mired in ongoing recession since the early 1990s, Japan has been implementing a new regulatory blueprint to kickstart a sluggish economy through structural change. A key element to this reform process is a rethink of corporate governance and its stakeholder relations. With a patchwork of legislative initiatives in areas as diverse as corporate law, finance, labour relations, consumer protection, public administration and civil justice, this new model is beginning to take shape.

But to what extent does this model represent a break from the past? Some commentators are breathlessly predicting the "Americanisation" of Japanese law. They see the triumph of Western-style capitalism - the "End of History", to borrow the words of Francis Fukuyama - with its emphasis on market-based, arms-length transactions. Others are more cautious, advancing the view that there new reforms are merely "creative twists" on what is a uniquely (although slowly evolving) strand of Japanese capitalism.

This paper takes issue with both interpretations. It argues that the new reforms merely follow Japan's long tradition of 'adopting and adapting' foreign models to suit domestic purposes. They are neither the wholesale importation of "Anglo-Saxon" regulatory principles nor a thin veneer over a 'uniquely unique' form of Confucian cultural capitalism. Rather, they represent a specific and largely political solution (conservative reformism) to a current economic problem (recession).

The larger themes of this paper are 'change' and 'continuity'. 'Change' suggests evolution to something identifiable; 'continuity' suggests adhering to an existing state of affairs. Although notionally opposites, 'change' and 'continuity' have something in common - they both suggest some form of predictability and coherence in regulatory reform. Our paper, by contrast, submits that Japanese corporate governance reform or, indeed, law reform more generally in Japan, is context-specific, multi-layered (with different dimensions not necessarily pulling all in the same direction ­ for example, in relations with key outside suppliers), and therefore more random or 'chaotic'.

Keywords: corporate governance, stakeholder relations, capitalism, law reform

JEL Classification: F00, F01, F02, K1, K33, N15, O53

Suggested Citation

Nottage, Luke R. and Wolff, Leon, Corporate Governance and Law Reform in Japan: From the Lost Decade to the End of History? (2005). CLPE Research Paper No. 3; Sydney Law School Research Paper No. 06/14. Available at SSRN: https://ssrn.com/abstract=830005 or http://dx.doi.org/10.2139/ssrn.830005

Luke R. Nottage (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006
Australia

The University of Sydney - Australian Network for Japanese Law

Room 640, Building F10, Eastern Avenue
Sydney, NSW 2006
Australia

Leon Wolff

Queensland University of Technology - Faculty of Law ( email )

Level 4, C Block Gardens Point
2 George St
Brisbane, QLD 4000
Australia
+617 3138 5210 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
900
rank
23,531
Abstract Views
4,441
PlumX Metrics