Comparing Japanese Versus U.S. Decision Making in Corporate Governance

This study examines how widespread the similarities between U.S. and Japanese corporate governance practices have become. Results suggest that, in spite of convergence in many areas of business practices, Japanese board structures and governance practices still differ greatly from those in the United States -- particularly in SEC-mandated reforms such as independent audit and compensation committees. Our results suggest that findings concerning corporate governance differences between Japanese and U.S. firms may be driven, in part, by differences in directors' recognition of investors' performance expectations. In particular, our results indicate that the exit barriers related to employment impact decision-making for Japanese directors more strongly than they affect U.S. directors' decisions