|Budget Amount *help
¥1,200,000 (Direct Cost : ¥1,200,000)
Fiscal Year 2004 : ¥500,000 (Direct Cost : ¥500,000)
Fiscal Year 2003 : ¥700,000 (Direct Cost : ¥700,000)
I, together with Professor J.Mark Ramseyer of Harvard Law School, investigate the relationship between board composition and firm performance of Japanese firms, focusing on "outside directors". The first paper (Who Appoints Them, What Do They Do?), using financial data on 1,000 odd Tokyo Stock Exchange listed firms, examines the relationship for the periods of 1985-90 (so-called the period of Bubble Economy") and 1990-95 (period of disorder and stagnation). The second paper (Does Relationship Banking Matter?) and the third paper (Conflicts of Interests in Japanese Insolvencies), focusing on the relationship between banks and their lending firms (borrowers), examine corporate governance of borrowing firms and the behavior and roles performed by Japanese banks when borrowers fall in financial distress.
All three papers reach the same conclusion : the conventional wisdom about Japanese firms lacks firm empirical foundation, and our tests show that it is false ; Those policy claims, based upon this conventional wisdom, such as recommending strongly an increase in outside directors as board members and emphasizing reconstruction of close relationship with lending banks including "main bank.", are totally false. It is widely believed, both at home and abroad, that lending banks, most notably "main bank", take actions in rescuing borrowers when they fall in distress, and succeed in their reconstruction. Out studies show, using massive micro-data, that, if there are a few such cases, the story does not hold in general, and that it is far from the truth. In this sense, bank-borrower relationship in Japans is not different from those in other economies.