Does corporate board downsizing increase shareholder value? Evidence from Japan |
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| Authors: | Konari Uchida |
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| Institution: | 1. School of Finance, Capital University of Economics and Business, China;2. Faculty of Economics, Kyushu University, Japan;3. Graduate School of Economics, Waseda University, Japan;1. School of Accounting, Zhongnan University of Economics and Law, 182 Nanhu Avenue, Wuhan 430073, China;2. Faculty of Economics, Kyushu University, 744 Motooka, Nishiku, Fukuoka 819-0395, Japan;3. Central China Normal University, 152 Luoyu Road, Wuhan 430079, China;1. Graduate School of Economics, Kyushu University, 6-19-1, Hakozaki, Higashiku, Fukuoka 812-8581, Japan;2. Faculty of Economics, Kyushu University, 6-19-1, Hakozaki, Higashiku, Fukuoka 812-8581, Japan;3. Faculty of Economics and Business Administration, The University of Kitakyushu, 4-2-1, Kitagata, Kokuraminamiku, Kitakyushu 802-8577, Japan |
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| Abstract: | Japanese firms that have traditionally had large boards have recently become subject to pressures for small boards. This study shows that Japanese firms that substantially decreased board size tended to adopt an officer system and so did not substantially decrease the size of the management team (executive officers and directors). This tendency is especially evident for high-performing firms that face less information asymmetry. Japanese firms endogenously choose the change in the management team size when downsizing their boards. Firms that downsize boards do not show performance improvements, suggesting that board downsizing does not necessarily raise shareholder value. |
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