A Japanese keiretsu is effectively a system of cooperation among various stakeholders. From the Japanese point of view, corporate governance includes maximation of long-term corporate repute for shareholders and accountability to all the stakeholders, particularly shareholders (Corporate Governance Committee of Japan 1997). This illustration appears more attractive than the Anglo-Saxon corporate governance representative since it takes social benefits into account. However, it must be noticed that the workability of this mock up relies on a flawless functioning of the market economy, which is not continuously the case in Japan (ibid). The later paragraphs will cover in detail the corporate governance issues related to the Japanese keiretsu system in relation with financiers, owners, suppliers and employees.
a) Financiers
As shown in render 8 Ownership Structure of Major Japanese self-propelled Assemblers (1989), banks in Japan usually hold a straightforward portion of equity in borrowing companies.
The Japanese model is often perceived as efficient since it encourages information fall between firms and their lending banks (Hoshi 1997, Kashyap 1999 and Scharfstein 1990). However, there are potential problems that cannot be ignored. Firstly, financiers can influence the behavior of the borrowing firm. For instance, as major shareholders, banks can induce firms borrow more than profit maximization would warrant (Yafeh 2000 p79). In addition, banks can exert pressure on firms to adopt low-risk low-return investment strategies that do not optimize shareholders value (Ibid). It is important to note that Anglo-Saxon styled stock-market finance is necessary for military rating of the company under certain circumstances, especially for innovative industries...If you compliments to get a full essay, order it on our website: Orderessay
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