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Japan has always been an “odd man out” from the standpoint of Western norm or Western finance. It is a country that is as developed as any in the West. However, it is also a country that possesses the significant institutional and cultural traits that separate it from the West. An important question in finance is to what extent the basic models of finance, developed with the Western “perfect market” view in mind, can be applied to Japan; or conversely, what critical adjustments must be made to make models amenable to the reality of Japanese finance.

This paper examines the exchange risk sensitivity of Japanese firms, and the exchange risk pricing in the Japanese stock market for the period of 1975–2001. We find that an appreciation of the yen is positively associated with industry portfolio returns. This supports the dominance of wealth effects over cash flow effects. This is in contrast to U.S. studies that report a weak, negative relationship between stocks and the domestic currency. The results are more pronounced in the pre-Crash period, and vary somewhat depending on the exchange risk measures used. Similarly, the exchange risk is priced in the pre-Crash period, but not in the post-Crash period. These results suggest that the exchange rate elasticity of the Japanese economy has declined in the post-bubble period of economic stagnation.

Disruptive digital technological innovation has the potential to dramatically alter the corporate landscape as we know it. The authors explore this premise by examining both industry practices and their conceptual bases in the digital age. The authors then describe cases and trends in the three main mediums of digital innovation – artificial intelligence, fintech, and blockchain. The authors focus on how these innovative technologies can impact the firms by creating values as part of corporate strategy, and by changing the way employees work. However, the impacts will likely go well beyond business and finance, and are likely to be adopted by healthcare, non-government organizations, and governments as well.

The current US financial crisis has elicited unprecedented responses by various government agencies and institutions. The current crisis is the most serious since the 1930s in terms of its financial and economic impacts and global repercussions, but its origin in the largest developed country in the world contrasts with other crises originated in emerging markets. We survey the issues pertaining to the similarities and differences in the causes and policy responses in the current US financial crisis versus the Asian financial crisis in 1997–1998. We discuss the implications for prevention and management of similar financial crises in the future.

Conventional foreign direct investment (FDI) theories regard FDIs as strategic moves based on operational or industrial organization considerations. We demonstrate that financial factors are also important in corporate FDI decisions. The financial factors concern internal capital market strength and corporate governance and include exchange rate changes, internal and external financing cost, risk diversification, and agency costs. There is variability in the significance of financial variables depending on industries and destinations. The integrated model with both strategic and financial factors is superior to either component model in explaining FDIs. However, financial factors are no less important in explaining the prevailing FDI phenomena than strategic or operational variables.

The financial services industry is experiencing rapid consolidation globally. Consolidation has proceeded not only in the same market but also across different market segments and across national boundaries. In this paper, we (a) outline the general trend of the mergers and acquisitions (M&As) and consolidation of the financial service industry in the U.S. and in the global economy; (b) identify and analyze the reasons that contribute to the consolidation of the financial service industry; (c) examine some cases of successful and unsuccessful financial service M&As; and (d) arrive at some strategic implications.

Effective mechanisms for corporate governance are essential for market-based economic systems. This chapter addresses the necessity of corporate governance research to address the competing goals of various stakeholders in the firm: managers, suppliers of financial capital, and other stakeholders. The review of literature reveals that firm-level complexity, as well as diversity of national business systems, are important for understanding corporate governance practices and regulations around the world.