Corporate governance has recently become a focus of attention in Japan and other advanced countries. Although the term 'corporate governance' is now commonplace, it has been used differently by different writers. In this paper, it
is defined as the r...
Corporate governance has recently become a focus of attention in Japan and other advanced countries. Although the term 'corporate governance' is now commonplace, it has been used differently by different writers. In this paper, it
is defined as the relationship among "stakeholders" in determining the performance of corporations.
From this perspective, we consider several economic approaches to corporate governance. Examined are neoclassical (textbook) theory, agency theory of the firm, transaction cost economics and its extended version, comparative institutional analysis. And it is concluded that transaction cost approach is the most useful framework to analyze Japanese corporate governance because a firm-specific input or its implication, the stable and long-term transactional relationship among stakeholders plays an essential role in Japanese corporate governance.