Corporate Governance of Japanese Banks

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Abstract
We investigate corporate governance of Japanese banks from the 1970s to the 1990s. In spite of economic shocks to the operating environment of Japanese banks over this period, there are few mergers, failures, and other changes in ownership and control. We also find that executive turnover is insensitive to bank performance except in the 1990s. These results suggest that ineffective governance exacerbated the Japanese banking crisis and delayed subsequent restructuring. Heightened managerial incentives in the 1990s and recent bank failures and mergers indicate, however, that Japanese banks will be better governed as they enter the 21st Century.