Financial Ownership,Diversification and Firm Profitability in Japan |
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Authors: | Gedajlovic Eric Shapiro Daniel M. Buduru Bogdan |
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Affiliation: | (1) Department of Management, University of Connecticut, 2100 Hillside Rd Unit 1041, Storrs, CT 06269, USA;(2) Faculty of Business Administration, Simon Fraser University, Vancouver, British Columbia, Canada;(3) Department of Economics, Simon Fraser University, Vancouver, British Columbia, Canada |
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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. |
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Keywords: | agency theory corporate governance financial institutions Japan |
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