Thesis or Dissertation Japanese Corporate Ownership Structure in the 21st Century: Does the Increased Equity Ownership by Foreign Institutional Investors Promote Governance Improvements?

Mian, RehmanUddi  ,  Mian, Rehman

This study investigates the effect of the shift from a previously insider-dominated to a more outsider-oriented Japanese corporate ownership structure on the quality of corporate governance. Specifically, this dissertation examines if the increased equity ownership by foreign institutional investors promotes governance improvements in Japan. The findings of this study depict that foreign institutional ownership leads to improvements in the quality of corporate governance. Through their effective and increased monitoring, foreign institutional investors are able to put disciplining pressure on firms’ management to adopt performance maximizing policies in terms of market value and shareholder-oriented practices. In contrast, I find that the relationship-oriented stable shareholders negatively affect corporate governance quality and outcomes. Overall, the findings of this dissertation suggest that foreign institutional ownership is one of the main driver of governance improvements in Japan.
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