The Unwinding of Cross-Shareholding in Japan: Causes, Effects, and Implications 1

Hideaki Miyajima, Fumiaki Kuroki

Research output: Chapter in Book/Report/Conference proceedingChapter

44 Citations (Scopus)

Abstract

As the ownership structure of Japanese corporations has changed dramatically during the 1990s, this chapter examines the causes and consequences of the decline in cross-shareholding. Using detailed and comprehensive data on ownership structure, including data on individual cross-shareholding relationships and other variables (Tobin's q) developed by the Nissai Life Insurance Research Institute and Waseda University, the chapter highlights the determinants of the choice between holding or selling shares for both banks and firms. Profitable firms with easy access to capital markets and a high level of foreign ownership prior to the banking crisis tended to unwind cross-shareholdings, while low-profit firms which had difficulty accessing capital markets and low foreign ownership tended to keep cross-shareholding with banks. High institutional shareholding and, surprisingly, block shareholding have had positive effects on firms' performance, while bank ownership has had consistently negative effects on firm performance. The result has been a growing diversity of ownership patterns among Japanese firms.

Original languageEnglish
Title of host publicationCorporate Governance in Japan: Institutional Change and Organizational Diversity
PublisherOxford University Press
ISBN (Print)9780191713705, 9780199284511
DOIs
Publication statusPublished - 2007 Sep 1
Externally publishedYes

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Keywords

  • Corporate governance
  • Cross-shareholding
  • Japanese economy
  • Keiretsu
  • Main bank
  • Networks
  • Stock market valuation

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Miyajima, H., & Kuroki, F. (2007). The Unwinding of Cross-Shareholding in Japan: Causes, Effects, and Implications 1. In Corporate Governance in Japan: Institutional Change and Organizational Diversity Oxford University Press. https://doi.org/10.1093/acprof:oso/9780199284511.003.0003