The Pursuit of Better Corporate Governance

Corporate governance is the cornerstone of corporate management and is closely related to corporate accounting and finance. This chapter focuses on how the corporate governance system has been established and developed in Japan. In recent years, in order to further invigorate the financial market and attract foreign investment, Japan has been working to improve its systems at the national level, and the development of corporate governance has been at the center of these efforts. There has been significant momentum, and the reforms have progressed through the introduction of a corporate governance code that prioritizes shareholders’ value. What is being pushed to the forefront is “better corporate governance,” which aims to create an environment that maximizes returns to shareholders through efficient business management. From this perspective, the traditional Japanese corporate practice of cross-shareholdings is seen as inefficient. The benefits of cross-shareholdings are therefore neglected, as they are uncertain, and steps have been taken to reduce their volume through various means. For example, with the introduction and revision of the Corporate Governance Code, the disclosure of the details and reasons for cross-shareholdings is required. The emphasis is now on the short-term performance of cross-shareholdings between corporations rather than long-term relationships, which can be interpreted as a case of shareholder-oriented performative financialization. The chapter also looks at the international convergence of corporate governance itself. As financial markets around the world become increasingly borderless and interconnected, corporate governance is gradually becoming more uniform. Thus, the simultaneity of financialization and globalization is evident in the context of corporate governance.