Does the amendment of Japanese Commercial Law increase the board's monitoring intensity? : A legal and economic approach

ショウホウ カイセイ ハ トリシマリヤク カイ ノ モニタリング キノウ ヲ タカメル カ ホウリツガク ケイザイガク ノ カンテン カラ ノ ケンショウ

イマムラ, ミツマサ

Imamura, Mitsumasa

坂和, 秀晃

サカワ, ヒデアキ

Sakawa, Hideaki

渡辺, 直樹

ワタナベ, ナオキ

Watanabel, Naoki

The Economic Society of Osaka University

オオサカ　ダイガク　ケイザイ　ガッカイ

モニタリング

商法改正

取締役会の規模

独立性の高い取締役

Board Size

Corporate Governance

Independent Directors

Japanese Commercial Law’s amendment

Monitoring

The purpose of this paper is to analyze the impact of the amendment of the Japanese Commercial Law in 2002, which aims at corporate governance reforms. We empirically examine whether corporate governance of Japanese firms improves with the smaller board size and the larger share of independent directors. It is difficult to directly examine whether the corporate governance is improved by the amendment because there is not enough time to realize stronger governance system after it. In this paper, we check the relevance of the amendment by estimating the effect of governance structure before it. Using a 1991-1995 panel data of 522 firms listed at the 1st section of the Tokyo Stock Exchange, we examine the relationship between governance structure and profitability. Then, we find that the board size effect exists in Japan as in the US, as shown in the previous studies such as Yermack (1996), and also that there is no significant relationship between the share of independent directors and profitability. This means that the monitoring of independent directors is inadequate in Japan.

坂和, 秀晃

渡辺, 直樹