Investor Rights in Historical Perspective: Globalization and the Future of the Japanese Firm and Financial System

Juro Teranishi
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Juro Teranishi: Institute of Economic Research, Hitotsubashi University, Naka 2-1 Kunitachi, Tokyo, Japan 186-0042.

Asian Economic Papers, 2006, vol. 5, issue 1, pages 36-63

Abstract: The evolution of investor rights in Japan is examined in relation to the evolution in firm-specific skill formation. Asset holders (shareholders and landlords) delegated part of the control of their assets to actual producers (managers, workers, and tenant farmers) to maximize the benefits of firm-specific skill formation by the producers. A cautious approach is therefore needed in adjusting investor rights in Japan to global standards: stronger investor rights could enhance allocative efficiency of financial resources, but they could also be harmful to organizational efficiency based on investment by employees in firm-specific skills. (c) 2006 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

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