Evolving corporate governance and firms performance: evidence from Japanese firms

This study is an attempt to investigate the implications of the ownership structure and control transfers in the Japanese corporate market, which are attributed mainly to the government’s liberalization policies during 1990s. It appears that institutional shareholdings—either financial or non-financial corporations—are associated with poor performance, whereas the foreign and domestic private ownerships lead to an improvement in the performance of the firms. We observe that unwinding the cross-shareholding between banks and corporations and mutual transfers among non-financial institutions allows for efficiency gain. Furthermore, the ownership transfer to private and foreign individuals is consistently associated with high market value, which implies that individuals’ transfers lead to an increase in efficiency.