Application Paper #2
Improved Corporate Governance will improve Japan’s Earning Power
Luis C. Mendoza
Corporate Governance GB-6215(Online) Spring 2015
18 April 2015
Can improved Corporate Governance improve Japan’s earning power? Tradition and honor in Japan’s culture are very strongest traits which develop the foundations of daily lives and how corporations conduct business. A tradition in Japan is taking an all male work team, salesmen and clients to visit a bar/club after hours that are greeted by a “Hostess”. A “Hostess” is a woman who is paid to flirt with men. These visits are sometimes mandatory which corporations cover fully and label them as “entertainment expenses” ...view middle of the document...
Additionally, the absence of independent directors on decisions on resources and the business focus needs to be is another factor (Narioka, 2014).
Abstract #1 was selected from The Wall Street Journal from the article “Japan Seeks to Lure Investors with Improved Corporate Governance” written by Kosaku Narioka and published on 27 June 2014. Kosaku Narioka is a journalist that writes for the Wall Street Journal in Tokyo, monitors and provides input for a new blog names Japan Real Time. Mr. Narioka migrated from Japan to the U.S. and enrolled in an English as a Second Language program in a Community College in Atlanta, GA. Mr. Narioka is a graduate from the University Honors program at Texas State.
The article focuses on the Japanese Prime Minister developing the country’s first corporate governance code in an attempt to increase foreign investors into Japan and increase the earning power of Japanese companies (Narioka, 2014). Low profitability and a lack of oversight of executives from independent directors discouraged foreign investors. With this lack of oversight, some Japanese companies fail to make the most effective and business minded decisions. In the corporate governance code, it requires companies to establish at least one independent director on the board and if they fail to execute, the company will be required their decision to current shareholders and may cause a concern to potential investors.
I believe abstract #1 has relevance to our class studies that regardless of what corporation size, type, business field and country of development, culture and corporate governance will be a constant friction. The Japanese culture views specific corporate governance oversight as a lack of trust and faith in executive’s leadership styles due to the accepted business practices and corporate society expectations. Western culture, as in the U.S. views and accepts corporate governance into daily business operations as a checks and balances. Prime Minister Abe understands and accepts culture as a strong hold in Japanese corporations. He understands that Japanese corporations need to take the next step into developing and incorporating positive governance practices in order to survive the long term and potentially entice foreign investors. Under Prime Minister Abe’s proposed corporate governance plan, independent directors on boards will provide some oversight and defining the roles and responsibilities pf executives, board directors and other stakeholders.
Abstract #2 was selected from The Bloomberg View, which the article is “Japan Flirts with Governance Reform” written by Mr. Noah Smith and published on 9 January 2015. Mr. Smith is an assistant professor of finance at Stony Brook University, a freelance writer for several finance and business publications. Mr. Smith maintains a personal blog names Noahpinion. Mr. Smith research interests are experimental finance, behavior finance and macroeconomics. His specialty is on board service...