Hideaki Miyajima

Corporate mission, corporate policies and business outcomes: evidence from Japan

Purpose – This study sets out to explore questions such as: “Does mission statement matter? If so, in what ways?” Using data on mission statements of 128 large Japanese firms, the paper aims to show that corporate mission has a significant impact on corporate policies that determine employment, board, and financial structures.Design/methodology/approach – The paper provides evidence that strong‐mission firms are more likely to retain incumbent employees, promote managers from within firms, and have less debt and a higher percentage of interlocking shareholdings than weak‐mission firms.Findings – The evidence supports the view that strong‐mission firms value their organizational capital and thus tend to adopt policies to preserve it. It also confirms that corporate mission and its embedded policies contribute to better corporate performance. The paper suggests that the effect of explicit corporate mission and its implementation has practical impacts in corporate policies and business outcomes.Research limi...

Understanding the M&A Boom in Japan: What Drives Japanese M&A?

In this paper, we examine the causes of the first merger boom since the late 1990s in Japan. Using industry-level data, we show that mergers and acquisitions (M&As) are driven mainly by economic shocks. While industries with higher growth opportunities are likely to have more M&A activity, industries facing negative fundamental shocks, such as rapid sales declines, also experience larger M&A deals. These results suggest that the recent merger wave in Japan is mainly explained by the neoclassical model. At the firm level, we find that the bidder is the firm with the higher growth opportunity, and the target is the one with the lower growth opportunity. This means that Japanese firms improved their efficiency through merger activity since the 1990s. Lastly, we find that internal funds for the acquiring firm play a very important role in bidding activity, while a high probability of being targeted for M&A is associated with high leverage.

How Important Historically Were Financial Systems for Growth in the U.K., U.S., Germany, and Japan?

The case studies for each country survey the literature on the role of their financial systems in their development. The sources of finance for industrial development include (i) banks, (ii) securities markets, (iii) internal finance, (iv) alternative sources of finance such as angel finance, trade credit, families, and friends, and (v) governments. All four countries had sophisticated financial systems and all four grew successfully. The fact that they had different financial systems suggests that if there is an optimal financial structure for a country it does not lead to a significantly greater level of growth than other possible structures. The experiences of the four countries considered suggest that a variety of financial structures can lead to high rates of growth in real per capita GDP.

A Comparison of Mergers and Acquisitions in Japan, Europe and the United States

A large social science literature has emerged on the role of mergers and acquisitions (MA Hall and Soskice, 2001; Rossi and Volpin, 2003). In the United States and the United Kingdom, the level of M&A is high and hostile takeovers are seen as being common (or at least a realistic possibility). In Japan and other continental European countries such as France or Germany, the level of M&A activity has been much lower prior to the 1990s. Moreover, hostile takeovers were extremely infrequent or even perceived as being impossible to implement.

Does Corporate Culture Matter? Evidence from Japan

Corporate culture does matter. Using data on mission statements of large Japanese firms, we show that corporate culture has a significant impact on corporate policies that determine employment, board, and financial structures. We provide evidence that strong-culture firms are more likely to retain incumbent employees, promote managers from within firms, and have less debt and a higher percentage of interlocking shareholdings than weak-culture firms. This evidence suggests that strong-culture firms consider their culture to be organizational capital and adopt policies to preserve it. We also confirm that culture and its embedding contribute to better corporate performance. We find these culture effects to be considerable in magnitude and at least as large as those of other factors, and assert that the role of culture must be taken into account in order to understand corporate policies and performance.

Changes in the J-type firm from bank-centred governance to internal governance

Japan is currently undergoing many interesting changes, which the Japanese government trumpets as fundamental reform, but which some observers suspect will turn out to be superficial, part of a long sequence of changes which have been much less far-reaching than at first anticipated. This book provides a survey of the many changes currently in progress in Japan, including political reform, economic deregulation and liberalisation, and reforms to environmental policy, science and technology, education, and immigration policy. The essays in this volume explore the reform process in Japan overall, and provides a thorough overview of major current developments in Japan. Jennifer Amyx University of Pennsylvania, USA Tessa Morris-Suzuki Australian National University, Canberra, Australia Mike Danaher University of Central Queensland, Rockhamption

Benchmarking business unit governance in turbulent times: The case of Japanese firms

Purpose – The purpose of this paper is to examine how corporate headquarters control business units, the governing of which has emerged as a vital issue as business portfolios have grown increasingly complex due to diversification, globalization, and corporate group expansion via spinoffs and mergers and acquisitions.Design/methodology/approach – This study utilized questionnaire survey data from 251 firms listed on the First Section of the Tokyo Stock Exchange. The authors approached the issue of business unit governance by measuring the degree of decentralization and the intensity of monitoring, and compared the governance of internal business units with that of subsidiaries, and analyzed the impact of corporate governance characteristics on business unit governance.Findings – Comparing in‐house business units and subsidiaries, the authors found a significant difference in their governance. The degree of decentralization toward subsidiaries was higher for strategic and personnel decision‐making. However...

The Comparative Features and Economic Role of Mergers and Acquisitions in Japan

The Japanese economy is in the midst of a major merger and acquisition (M&A) wave for the first time in the postwar period. This paper puts a spotlight on Japans M&A activity, which has surged since the end of 1999, and takes a look at the factors that have contributed to the surge, and its various economic dimensions. The paper places Japans M&As in an international context, and identify the causes of the wave and its structural characteristics (sections 2 and 3). It also examines the economic role of M&A and its pros and cons. We contend that M&As contribute to raising the efficiency of resource allocation and organizations (sections 4 and 5). The last section addresses policy implications and contains concluding remarks.

Corporate governance, relational banking and R&D: evidence from Japanese large firms in the 1980s and 1990s

We investigate the effects of the Japanese corporate governance structure on corporate investments, especially R&D, dividing Japanese high R&D firms into two groups, i.e. young growing firms and old mature firms. The main bank relationship mitigates the asymmetric information problem for young growing firms. R&D expenditure in the 1990s. Portfolio investors strengthen the cash constraints on R&D, while stable shareholders offset the myopic pressure by portfolio investors. We also show some evidence that stable shareholders induced old mature firms to overinvest during the bubble economy period.

Does Ownership Really Matter? The role of foreign investors in corporate governance in Japan

After the banking crisis of 1997, corporate ownership in Japan shifted from an insider-dominated to an outsider-dominated structure. This paper analyzes the impact of dramatic changes in the ownership structure on corporate governance and firm value, focusing on the role of foreign institutional investors. There are two competing views on the role of increased foreign ownership. The positive view is that foreign investors have high monitoring capability, and encourage improvements in the governance arrangement of firms, resulting in higher performance. Conversely, the negative view is that they have strong bias in their investment strategies, and are less committed to a particular firm. Even though a correlation between foreign ownership and high performance has been observed, it may be a superficial one. Higher stock returns can be induced by the demand for a stock, while performance can simply reflect a foreign investors preference for a high quality firm. To determine which view is more compelling, we constructed a unique long-term data set, and examined the determinants of foreign ownership and its impact on stock returns as well as performance. We found that the investment behavior of foreign investors is characterized by a particular bias, and takes into account governance arrangements. Second, their investment substantially affects the stock return of firms. Third, even after controlling for reverse causality, however, their growing presence positively affects firm performance, suggesting that foreign institutional investors play a disciplinary role once their shareholding increases.