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The list of recent papers
1. Hirohiko Shimpo, American Corporate Governance in the Interwar Period.
2. Hirohiko Shimpo, Leading Japanese Companies in the Interwar Period and
the Relationship between Them.
3. Hirohiko Shimpo, Financial Market and Institutional Investors in Prewar
Japan.
Hirohiko Shimpo, American Corporate Governance in the Interwar Period,
Osaka Sangyo University, Journal of Economics, Vol.6 No.2, Mar. 2005. (in Japanese)
Key Words: corporate governance, Berle & Means type companies, management control, business groups, investment companies
Abstract
I have already published two papers and clarified that Japanese corporate governance in the interwar period was market oriented and that it was very like the present U.S. and British type.
Incidentally, in U.S. companies in those days, as Berle, Adolf A. &
Gardiner C. Means (1932) clarified, stockholding was widely dispersed and
separation of ownership and control was performed. In this paper, I want
to focus on various investigation reports on U.S. companies from those
days, and reexamine their validity in detail. Moreover, based on the examination
result, I think that a comparison with Japan is another important subject.
First, in Section I, I survey the discussion on corporate governance actively developed since the second half of the 1990s in the United States, show clearly that the comparative survey on the corporate governance in each country was started on a worldwide basis for the first time, and point out various problems.
In Section II, I examine the top 30 companies of Berle & Means in detail,
and reexamine U.S. corporate governance in the interwar period, as well
as the fundamental features of Berle & Means type companies. As a result,
I prove the theory of Berle & Means to be fundamentally correct, and
at the same time, clarify that the state of management control differed
considerably by industry; the financial features of each company in every
industry were very different.
In Section III, I point out that in the United States in those days, while
Berle & Means type companies were dominant, business groups played
a large role and Berle & Means type companies themselves were often
centers and important factors. And I confirm that investment companies,
which were the most representative institutional investors, urged the formation
of business groups.
In the final Section IV, based on the above examination, I compare comprehensively
corporate governances between U.S. companies and Japanese companies in
the interwar period. Through this comparison, I can determine not only
large differences or contrastive characters, but also common features.
Concretely speaking, these were the dispersed stocks, the high dependence
on financing through the market and the role of business groups etc. These
common features of each corporate governance were created by the composition
of economic structure and industry in those days and their global correlation.
List of contents
Introduction
1. Controversy on corporate governance in the present United States
2. Dispersion of stockholding in the United States
3. Companies and financial institutions
4. A comparison of corporate governance between Japan and the U.S. in the interwar period
Conclusion
Hirohiko Shimpo, Leading Japanese Companies in the Interwar Period and
the Relationship between Them,
Osaka Sangyo University, Journal of Economics, Vol.5 No.2, Feb. 2004. (in Japanese)
Key Words: Japanese Corporate Governance, Zaibatsu, Main Bank System, Market Oriented
Corporate Governance, Japanese Institutional Investor
Abstract
The current Japanese corporate governance is characterized as "Continental
European and Japanese model: the insider model of corporate governance".
One of the most important characteristics is that companies prioritize
the interests of stakeholders within companies and their business groups
over and above those of the investors who invest in the financial and securities
market.
Many scholars thought the origin of such corporate governance or current business groups were past Zaibatsu. In my paper, I want to investigate the characteristics of leading Japanese companies in detail over the interwar period from 1920 to 1940, focusing on corporate governance, and reexamining the previous opinion. This will enable us to understand the background in which the current form of corporate governance was established.
First, as for the three fiscal years of the interwar period in Section
I, I examine the top 30 Japanese representative non-banking companies and
in Section II, the top 10 banks respectively. I consider all representative
Japanese companies and banks, rather than targeting only Zaibatsu or Zaibatsu
related companies and particularly focus on the situation of stockholders
and clarify the relationship between companies and holding companies, banks,
and insurance companies as institutional investors.
In Section III, of the aforementioned companies and banks, I focus on the
most important companies and the entirety of their financial information
while in Section IV; I consider the investment by some of them in more
detail. Thus, the relationship between these companies and banks and the
financial and securities market can be clarified.
In the final Section V, I approach the actual conditions and roles of stock
investment by insurance companies; as representative Japanese institutional
investors who have invested positively in the companies and banks of that
period in the financial and securities market.
In addition, I collect as much data on each company as possible, provided
in abundance, in order to clarify the individual figures concerning their
activities.
The following can be concluded through this examination: for leading Japanese
companies and banks, on the whole, the role of the financial and securities
market was decisive in terms of financing and investing during the interwar
period. Consequently, the Japanese corporate governance in the interwar
period can be said to be very similar to the current U.S. and British model,
the typical market oriented corporate governance. It is certain that vertical
and integrated relationships were formed between the governors and the
governed, placing holding companies in the superior position. Even in this
case, the role of the market was not minor, and the type of governance
in major Zaibatsu was not necessarily dominant.
However, the form mentioned was lost gradually due to the preparations
and rush into the Second World War. After the war, resulting from the reduction
of the financial and securities market and the dissolution of Zaibatsu
and holding companies, the role of banks inevitably rose up, leading to
the establishment of the so-called Japanese main bank system.
List of content
Introduction
1. Representative Japanese Companies in the Interwar Period
2. Representative Japanese Banks in the Interwar Period
3. Financial Information concerning Leading Companies and Banks
4. Securities Investment by Banks and Holding Companies
5. Stockholding by Insurance Companies
Conclusion
Hirohiko Shimpo, Financial Market and Institutional Investors in Prewar
Japan,
Osaka Sangyo University, Institute for Industrial Research, Reorganization of Mechanism in Asian Economic Development, 2003. (in Japanese)
Key Words: Japanese Corporate Governance, Zaibatsu, Main Bank System, Market Oriented
Corporate Governance, Japanese Institutional Investor
Abstract
This paper and "Leading Japanese Companies in the Interwar Period
and the Relationship between Them" represent a pair of papers. The
latter clarified the nature of Japanese corporate governance during the
interwar period as market oriented, based on micro information of major
companies and financial institutions.
This paper is mainly concerned with evaluating overall trends of the entire
financial and securities market through the use of macro data, while also
checking the previous conclusion and examining the roles of institutional
investors in the market on an overall basis.
My initial aim involved surveying entire markets and clarifying the following
point. In the period covered, the rate of aggregate market value to GNP
was always around 100%, namely very high, and in this market, the stock
market which initially consisted of public utilities companies, followed
by manufacturing companies, came to gradually represent the core, occupying
the principal positions, meaning that the role of the market was decisive.
In Section II, I focus on the bond market which was the same size as the
stock market around 1930, especially corporate bonds, which represented
an important part of the national bond market. I show that in this market,
independent non-Zaibatsu companies played a greater role than in the stock
market.
By the way, as evaluated in the previous paper, the important feature of
Japanese corporate governance in the interwar period was the rapid development
of institutionalization. In terms of representative Japanese institutional
investors, excluding holding companies, we must focus on life insurance
companies. As I clarified in section Ⅲ, life insurance companies in those
days managed about 50% of their assets in the form of various securities,
and rapidly increased stock investment as a priority. However, the purpose
of the investing activity was mainly to increase the managed profits and
any active participation in the business activities of companies was not
shown.
In the last Ⅳ, I confirm that the financial supply to companies was chiefly
in the form of stock, in other words, direct finance, and private financial
savings including private savings, the securities investment peaked just
before the outbreak of war.
There was an enormous accumulation of Zaibatsu research in Japan, and to
date, studies tend to regard the prewar Zaibatsu as characteristics of
the economy at the time, with corporate governance dominant in those days.
However, the examination of both companies and markets over two papers,
make it clear that the Japanese corporate governance of the interwar period
was very similar to U.S. and British model, in terms of its market oriented
nature. In addition, as I mentioned before, the Japanese example also showed
the unique feature of rapid and remarkable development of institutionalization
over a short period, at the same time.
The previous examination leads to the conclusion that, even in countries which began to develop economically, such as Japan in those days, it is possible to form corporate governance based on the financial and securities market, in other words, market oriented corporate governance and consequently, to attain rapid economic development.
In my two papers, I insist that the Japanese corporate governance in the
21st century will be developed, not through the main bank system that developed
under the historical conditions of the dissolution of economy by defeat
in the war, but through Japan already developed in the prewar period.
List of contents
Introduction
1. Survey concerning the Financial and Securities Market in Prewar Japan
2. Corporate Bond Market in Prewar Japan
3. Insurance Companies as Institutional Investors
4. Private Capital Movement in Enterprises and Individual Sector
Conclusion
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