Financial Ownership, Diversification and Firm Profitability in Japan

Eric Gedajlovic (), Daniel Shapiro and Bogdan Buduru

Journal of Management & Governance, 2003, vol. 7, issue 3, 315-335

Abstract: The Japanese system of corporate governance andin particular the role played by banks andother financial institutions have been thesubject of considerable research andcontroversy in recent years. We estimate theimpact of equity ownership by financialinstitutions on firm performance in Japan for1986–1991, a period that precedes many of theproblems of the ensuing decade. We find thatwhile ownership by financial institutions isassociated with unprofitable diversification,such ownership is, on balance, positivelyassociated with firm profitability. Someimplications of these findings for Japan'sunique system of governance are discussed. Copyright Kluwer Academic Publishers 2003

Keywords: agency theory; corporate governance; financial institutions; Japan (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (2)

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DOI: 10.1023/A:1025029601562

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