Ownership structure, investment behaviour and firm performance in Japanese manufacturing industries

• Main Authors: Gedajlovic, Eric, Yoshikawa, Toru, HASHIMOTO, Motomi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2005
• Subjects: ownership; foreign investors; institutional investors; corporate governance; Japan; dividends; capital expenditures; Asian Studies; Business Law, Public Responsibility, and Ethics; Corporate Finance; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/2288; https://ink.library.smu.edu.sg/context/lkcsb_research/article/3287/viewcontent/OwnershipStructureInvBehavFirmPerfJapaneseManu_2005.pdf
• Institution: Singapore Management University

Using data spanning the 1996-98 fiscal years of 247 of Japan's largest manufacturers, we empirically evaluate the extent to which a firm's investment behaviour and financial performance are influenced by its ownership structure. To do so, we examine six distinct categories of Japanese shareholders: foreign investors, investment funds, pension funds, banks and insurance companies, affiliated companies and insiders. Our findings strongly indicate that the relationship between the equity stakes of a particular category of investor and a firm' s financial performance and investment behaviour is considerably more complex than is depicted in simple principal-agent representations. Such a result emphasizes the importance of making finely grained and contextually relevant distinctions when modelling and evaluating corporate governance relations.