Table Of ContentChanging Corporate Governance Practices
in China and Japan
Also by Masao Nakamura
CHANGING JAPANESE BUSINESS, ECONOMY, AND SOCIETY:
Globalization of Post-Bubble Japan (editor)
THE JAPANESE BUSINESS AND ECONOMIC SYSTEM:
History and Prospects for the 21st Century (editor)
THE SECOND PAYCHECK:
A Socio-Economic Analysis of Earnings (with Alice Nakamura)
Changing Corporate
Governance Practices
in China and Japan
Adaptations of Anglo-American Practices
Edited by
Masao Nakamura
Konwakai Japan Research Chair and Professor, Institute of Asian Research
and Sauder School of Business, University of British Columbia
Selection and editorial content © Masao Nakamura 2008
Individual chapters © contributors 2008
No portion of this publication may be reproduced, copied or transmitted
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work in accordance with the Copyright, Designs and Patents Act 1988.
First published 2008 by
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ISBN-13: 978–0–230–22165–9 hardback
ISBN-10: 0–230–22165–3 hardback
This book is printed on paper suitable for recycling and made from
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A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Nakamura, Masao, Ph. D.
Changing corporate governance practices in China and Japan :
adaptations of Anglo-American practices / Masao Nakamura.
p. cm.
Includes bibliographical references and index.
ISBN 978–0–230–22165–9 (alk. paper)
1. Corporate governance––China. 2. Corporate governance––Japan. I.
Title.
HD2741.N355 2008
338.60951––dc22
2008030441
10 9 8 7 6 5 4 3 2 1
17 16 15 14 13 12 11 10 09 08
Printed and bound in Great Britain by
CPI Antony Rowe, Chippenham and Eastbourne
Contents
List of Tables and Figures vii
Acknowledgments ix
Foreword by Pitman B. Potter x
Notes on the Contributors xiii
1. Introduction 1
Masao Nakamura
Part I New Corporate Governance Practices:
Institutional and Economic Considerations
2. The Two Models of Corporate Governance and the
Institutional Reform of Chinese Enterprise 15
Peng Fei Yang
3. How to Prevent China’s Listed Companies from Making
Misstatements 29
Xiaorong Gu
4. Issues in the Protection of Minority Shareholders’ Rights
and Interests under China’s Company Law 52
Shuliang Wang
5. An Economic Perspective on Recent Corporate Governance
Developments in China with Comments on the Chapters
by Yang, Gu and Wang 63
Andrew Yuen and Anming Zhang
6. The “Grabbing Hand” and Corporate Governance in China 87
Wei Chi and Yijiang Wang
7. Corporate Governance Practices in Post-Bubble Japan:
Adapting to the Globalizing Economies of the
Twenty-First Century 113
Masao Nakamura
8. Understanding the M&A Wave in Japan: What Drives
Japanese M&As? 153
Yasuhiro Arikawa and Hideaki Miyajima
vi Changing Corporate Governance Practices in China and Japan
Part II Evolving Corporate Governance Practices:
Selective Adaptations
9. The Strange Role of Independent Directors in a Two-Tier
Board Structure in China’s Listed Companies 185
Jiangyu Wang
10. Low Structure, High Ambiguity: Selective Adaptation of
International Norms of Corporate Governance Mechanisms
in China 206
S. H. Goo and Anne Carver
11. Selective Adaptation of Anglo-American Corporate
Governance Practices in Japan 235
Masao Nakamura
Index 279
List of Tables and Figures
Tables
5.1 Profitability of state-owned enterprises 64
5.2 The number of state-owned and state-holding enterprises
in China (in thousands) 68
5.3 Tradable and non-tradable shares of Chinese listed
companies, 1992–2004 (in 100 million shares) 71
5.4 Chinese listed airport companies 74
7.1 Changing patterns of stable shareholding:
Japanese listed firms, 1987–2003 119
7.2 First-tier auto suppliers in the Toyota production keiretsu 125
7.3 Nissan’s suppliers who are owned at least 20 percent
by Nissan 127
7.4 Ownership patterns: Japanese listed firms 131
7.5 Japanese firms with large foreign ownership,
December 2004 132
8.1 Number of deals using a stock transfer system,
stock swap, and company divestiture system 157
8.2 M&A ratio by industry (1991–2004) 162
8.3 Identification of the M&A boom 164
8.4 M&A ratio and performance variables 169
8.5 Descriptive statistics and correlation matrix 170
8.6 Estimating the frequency of M&A deals by industry 171
8.7 Comparison of M&A and non-M&A companies 174
8.8 Estimation results for acquiring firms 176
8.9 Estimation results for target firms 178
11.1 Japan’s selective adoption of U.S.-style corporate
governance practices: selective adaptation in
institutional change 245
11.2 Do Japanese business norms help local acceptance of
U.S.-style corporate governance practices reflected in state
variables (s1)–(s5) in terms of their perceptions, legitimacy
and complementarity? Processes of selective adaptation 251
vii
viii Changing Corporate Governance Practices in China and Japan
11.3 Fraction of outside directors at Japanese corporations 256
11.4 Comparison of firm performance by the type of corporate
governance (outside directors), Tokyo Stock Exchange,
first section firms 257
Figures
5.1 Major stakeholders of a corporation 65
7.1 Long-term trends in the ownership structure of
Japanese listed firms 118
8.1 The trend in M&As 154
Acknowledgments
Earlier versions of the studies reported in most of the chapters in
this book were presented in draft form at a research conference titled
“Corporate Governance in East Asia.” This conference was held at the
Shanghai Academy of Social Sciences on July 18, 2005. That conference
was sponsored by the Institute of Asian Research of the University
of British Columbia and was funded in part by a Social Sciences and
Humanities Research Council of Canada (SSHRC) Major Collaborative
Research Initiative grant on the Asia Pacific Dispute Resolution Project.
The initial research and further development of some of the chapters in
this volume were also partially supported by funding from that same
SSHRC MCRI grant. We are grateful to this support. In addition, the editor
of this volume acknowledges separate research support for completing
this volume from SSHRC and from the University of British Columbia
Hampton Fund research grants.
ix
Description:This book is a timely evaluation of rapidly globalizing governance mechanisms in China and Japan. The author looks at how corporate governance practices in these countries are adapting to Anglo-American practices, but argues that these adaptations are selective, and both countries continue to retai
