The security market and the changing government role in Japan: Corporate governance issues
Abstract
Purpose
The purpose of this paper is to explain how current security market regulations in Japan have evolved following Japan’s corporate governance reforms, which began in the 1990s after the bursting of a massive financial bubble. As part of the reform, Japan aimed to introduce US-style corporate governance mechanisms.
Design/methodology/approach
This paper first explains the process behind Japan’s corporate governance reforms using the theory of selective adaptation. By doing so, the various changes that have taken place in the regulations of security markets are also explained. The paper concludes with a discussion of the limitations of transplanting US-style corporate governance mechanisms in Japan and the implications for the functioning of Japan’s security markets.
Findings
While applying a selective adaptation framework to Japan’s efforts to transplant US-style corporate governance mechanisms to its own markets, the author found that certain Japan-specific business practices, such as its heavy reliance on keiretsu corporate groupings, may interfere with the market-based business practices and free competition which characterize the US system. This in turn places limitations on the functioning of US-style security markets in Japan.
Originality/value
This paper explains the limitations of government regulation on security markets in Japan, which may be of interest to both public and private sector analysts. This paper focusses on Japan’s experience of transplanting US-style corporate governance mechanisms to Japan. The author expect that Japan’s experience will be of much interest to China, South Korea and other countries in East Asia, where pyramidal and other types of business groups play important roles in their economies.
Keywords
Acknowledgements
The author would like to thank two anonymous referees and the editor of this journal for their helpful comments on the original version of the paper, especially one anonymous referee for pointing out that the manners by which these East Asian countries import foreign cultures and norms, as the author discusses in this paper, are sometimes called “和魂洋才,” “中体西用” and “東道西器” in Japan, China and South Korea, respectively. Research reported in this paper is in part supported by the Social and Humanities Research Council of Canada.
Citation
Nakamura, M. (2016), "The security market and the changing government role in Japan: Corporate governance issues", Asian Education and Development Studies, Vol. 5 No. 4, pp. 388-407. https://doi.org/10.1108/AEDS-09-2015-0044
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited