The Study Of Corporate Law's Innovation And Japan's Corporate Governance Evolution

Socialized mass production in the modern economy made investment scale far more exceed individual capacity and at the same time, the need for diversifying investment risk produced joint-stock company based on limited liability, the prominent character of which was the separation of ownership of property and control right of the enterprise. Thereby the principle-agent problem arose because of different interests between the proprietor and the manager. In order to solve this problem, corporate governance mechanism centering allocation of control rights on enterprise emerged and different types of corporate governance have been developed in the courses of different countries'economic development as well as under the various constraints of different economic systems. Among these types, the modern Japanese corporate governance, built up in the course of Japan's economy development, which has been undergoing long-term depression yet all the way striving to reform economic system including enterprise system for recovery, has raised academic community's attention and has become one of the most important areas in research of Japan's economy.This dissertation belongs to these areas but is different from previous similar study on the perspective of Corporate Law and its innovation. It will take Japan's post-war corporate governance and its evolution as the object of study, analyzing the relations between Corporate Law innovation and the evolution of corporate governance. This study will likely illustrate the micro-foundation of modern Japanese economic system in a larger academic space, reveal more subtle and more complex relationships between government and legal system, government and market, government and corporation, and may significantly explain the character of Japanese modern economic system that differs from others.This dissertation is structured as follows.The introduction of this paper illustrated the research background, significance, situation of study, thinking and research methods. The first chapter discussed the generation and internal logical relations of corporate system, Corporate Law and corporate governance, systematically combed the historical progress that Japan transplanted western corporate institution in modern times and illustrated in details each revision of the Corporate Law until post-war time, i.e. early 1950's, as well as those impacts on Japan's corporate governance structures; especially pointing out the difference of corporate governance in the context of Corporate Law with that in the reality in respect of concept, system and operations.The second chapter expounded that Japan's modern corporate system derived from the exogenous democratic reform dominated by U.S. occupation forces. However, designed in accordance with American models by American occupation forces and set up through widely dispersed individual ownership together with reallocation of corporate control rights, Japanese enterprise system and relevant corporate governance has gone through adaptive evolution after the transition from controlled economy to market economy completed, and each aspect such as property structure, financial structure, allocation of control rights, etc has deviated from the American model.The third chapter discussed the consequences of Japan's corporate governance adaptive evolution, which led to a hierarchical structure including cross-shareholding based corporate ownership, governance of the main bank system, and also the insider control system. These institutional arrangements were not only characteristics fact of postwar Japanese corporate governance gotten through empirical perspectives but also the most critical elements that constituted Japanese tradition corporate governance and they played an important role in postwar process transition from late developed economy to industrialized economy.The fourth chapter illustrated that after the transition into industrialized economy, the economic situation and institutional environment surrounding Japanese corporations operations and governance had changed a lot. On condition that the capital market increasingly replacing main bank system in supervision of enterprises, stable shareholders constantly tending to dissipate which made corporate control right transfer become a real threat, Japan's traditional corporate governance faced with hard conditions. Thus it started launching corporate governance reform during the long-term depression and also came into the era of Corporate Law innovation. The fifth chapter focused on relations between Corporate Law revision started from the early 1990s and the new round of corporate governance evolution. This was the real sense innovation of Corporate Law for the first time in post-war decades. This chapter introduced content of Corporate Law innovation including board structure reform, incentive mechanism reform, information disclosure system reform and shareholder litigation condition reform. Based on above, the impact of innovation of Corporate Law on Japan's traditional corporate governance as well as its evolution direction was elaborated.The sixth chapter sums full text and investigated the evolution trend of Japan's corporate governance. Under the action of economic globalization and international market competition, there indeed showed the trend of convergence of corporate governance in world-wide scope and it has been reflected on the evolution trail of Japan's corporate governance. Nonetheless, this chapter emphasized that with the background of Japan's Corporate Law innovation, the character of Japan's corporate governance was that the reform engaged to external market restriction went relatively faster while the internal mechanism reform lagged behind, in other words, the external governance and the internal governance were developing unevenly. The running-in between them increased uncertainty of corporate governance evolution direction. So far there had no conclusive evidence to prove convergence to the Anglo-Saxon model.