Market Liquidity and Bank-Dominated Corporate Governance: Evidence from Japan

Sakawa, Hideaki; Ubukata, Masato; Watanabel, Naoki

doi:10.2139/ssrn.2139809

Cited by 4 publications

(3 citation statements)

References 39 publications

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“…From the agency theory perspective, an increase in institutional ownership is expected to ameliorate the monitoring system's effectiveness. First, institutional owners help reduce information asymmetry among investors (Sakawa et al, 2014). Second, shareholders' activism may impose pressure on CEOs for meeting an effective role (Yeh, 2014).…”

Section: Firm Risk-taking and Shareholders' Activitymentioning

confidence: 99%

The relationship between managerial entrenchment, social responsibility, and firm’s risk-taking and shareholders’ activity

Salehi

Alkhyyoon

2021

SRJ

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Purpose This study aims to assess the relationship between managerial entrenchment, social responsibility and risk-taking of the firm and shareholders’ activity. Design/methodology/approach The study is carried out based on the disclosed information of listed firms on Tehran and Iraq Stock Exchanges during 2011–2017 from a sample of 121 firms on the Iranian side and 37 firms on the Iraqi side. The hypothesis testing is performed using panel estimators of the adjusted regression models. Findings The obtained results from hypothesis testing show that there is a significant relationship between managerial entrenchment, social responsibility disclosure, social responsibility growth of the firm and risk-taking and shareholders’ activity in the Iranian Stock Exchange firms. Moreover, in the case of Iraqi firms, a significant relationship is observed between managerial entrenchment, social responsibility disclosure, social responsibility growth of the firm but the relationship between firm risk-taking and shareholders’ activity was not evident. Originality/value The current study is almost is the first study conducted on two Islamic countries and the outcomes of the study may help other Muslim countries on the subject of the study.

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Section: Firm Risk-taking and Shareholders' Activitymentioning

confidence: 99%

The relationship between managerial entrenchment, social responsibility, and firm’s risk-taking and shareholders’ activity

Salehi

Alkhyyoon

2021

SRJ

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“…Frequent trades by foreign shareholders can have a large impact on the stock prices of the firms they invest in (David et al, 2006). In addition, firms with larger foreign shareholdings face pressure for more precise disclosure because they can earn stock returns by reducing the degree of information asymmetry (Sakawa et al, 2014). Furthermore, foreign shareholders contribute to providing incentives for managers in Japanese corporations .…”

Section: 34mentioning

confidence: 99%

Family control and ownership monitoring in Stakeholder-oriented corporate governance

Sakawa

Watanabel

2019

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Purpose Principal–principal conflicts between family shareholders and other shareholders have been investigated in emerging economies, but fewer studies have examined the effect of concentrated ownership on firm profitability and dividend payout in stakeholder-oriented systems. The purpose of this paper is to examine whether family control leads to principal–principal conflicts resulting in wealth expropriation of minority shareholders by family owners in stakeholder-oriented systems. Design/methodology/approach This study uses large listed firms of the Tokyo Stock Exchange (TSE) in Japan during 2007–2016. Using 14,991 firm year observations, the authors analyze the effect of family control on dividend payout and firm performance to test the possibility of exploitation by family owners. Findings The authors find that family board members do not exploit minority shareholders and rather behave as stewards of the firm. The authors also find that foreign shareholders interact with family control to increase firm profitability, suggesting that foreign shareholders enhance the role of family board members as stewards. Originality/value Existing research on principal–principal conflicts tends to examine expropriation by family board members in emerging markets. This research reveals that family board members behave like stewards in the presence of stakeholder-oriented corporate governance mechanisms. In addition, foreign shareholders strengthen the stewardship role of family controlled firms.

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“…Article 433 of Companies Act states that shareholders who own not less than 3 percent of the shares have the right to inspect account books. We note also that individual banks are not allowed to hold more than 5 percent of the equity of non-finance companies in Japan (Sakawa et al , 2014). Combining the legal definition of a corporate insider with our observation that bank share ownership is concentrated around 5 percent in our sample, we define an insider bank using 5 percent ownership threshold[8].…”

Section: Resultsmentioning

confidence: 99%

Involuntary delisting in the Japanese stock market

Park

Shiroshita

Sun

et al. 2018

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Purpose The purpose of this paper is to analyze the wealth effect of involuntary delisting and investigate insider opportunism and the role of corporate governance, liquidity and legal environment in involuntary delisting in Japan’s stock market. Design/methodology/approach The authors use a sample of 136 involuntarily delisted firms in Japan’s stock markets between 2002 and 2012. The authors examine ownership changes of inside shareholders prior to delisting and estimate regression models for the wealth effect of involuntary delisting. Findings Involuntary delisting is highly disruptive in Japan, and limited liquidity of delisted stocks appears to be an important cause. However, the ownership reduction of inside shareholders before delisting is limited, totaling 2–3 percent. For delisted firms with an insider bank, the decrease in share price leading up to a delisting announcement is much less, while the decrease in share price upon a delisting announcement is far greater. Originality/value The study investigates involuntary delisting in regard to the opportunistic behavior of inside shareholders and the role of institutional environment in Japan’s stock market. Insiders, especially insider banks, maintain ownership in a distressful context leading to the forcible delisting of a distressed firm. The authors find some evidence that suggests that the market believes the insider bank will try to prevent the ailing firm’s insolvency. The findings are consistent with the implicit relational contracts that characterize Japanese firms.

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Market Liquidity and Bank-Dominated Corporate Governance: Evidence from Japan

Cited by 4 publications

References 39 publications

The relationship between managerial entrenchment, social responsibility, and firm’s risk-taking and shareholders’ activity

The relationship between managerial entrenchment, social responsibility, and firm’s risk-taking and shareholders’ activity

Family control and ownership monitoring in Stakeholder-oriented corporate governance

Involuntary delisting in the Japanese stock market

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