TY - JOUR
T1 - Intraboard heterogeneity and the role of bank-dispatched directors in Japanese firms
T2 - An empirical study
AU - Saito, Takuji
AU - Odagiri, Hiroyuki
N1 - Funding Information:
Earlier versions were presented at the ‘Corporate Governance and Investment Workshop’ at Cambridge University, the ‘Industry and Labor Workshop’ at Hitotsubashi University, and the Annual Meeting of the Japanese Economic Association. We are grateful to Katsuyuki Kubo, John Roberts, Yasushi Kondo, Atsuhiro Taki, and other participants of these workshops and meetings for their comments. We also thank the editor, S. Ghon Rhee and an anonymous referee for helpful suggestions. This research was partly financed by the 21st Century Center-of-Excellence Project on ‘Normative Evaluations and Social Choice of Contemporary Economic Systems’ (COE-RES) of Hitotsubashi University. Needless to say, we are solely responsible for any remaining errors.
Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.
PY - 2008/11
Y1 - 2008/11
N2 - To discuss the role of bank-dispatched directors in the governance of Japanese firms, it has to be noted that the board is heterogeneous and only senior directors, including presidents and managing directors, are likely involved in major management decisions. With a panel of about 1150 firms in 1990-98, we find that, when bank loans constitute a significant portion of the firm's assets, the low industry-adjusted profitability increases the probability that a new (or additional) director is dispatched from the bank at a senior level but not at a junior level. This dispatch improves the firm's performance provided it does not merely replace the predecessor.
AB - To discuss the role of bank-dispatched directors in the governance of Japanese firms, it has to be noted that the board is heterogeneous and only senior directors, including presidents and managing directors, are likely involved in major management decisions. With a panel of about 1150 firms in 1990-98, we find that, when bank loans constitute a significant portion of the firm's assets, the low industry-adjusted profitability increases the probability that a new (or additional) director is dispatched from the bank at a senior level but not at a junior level. This dispatch improves the firm's performance provided it does not merely replace the predecessor.
KW - Corporate governance
KW - Director
KW - Japanese firm
KW - Main bank
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U2 - 10.1016/j.pacfin.2007.07.003
DO - 10.1016/j.pacfin.2007.07.003
M3 - Article
AN - SCOPUS:53149142486
SN - 0927-538X
VL - 16
SP - 572
EP - 590
JO - Pacific Basin Finance Journal
JF - Pacific Basin Finance Journal
IS - 5
ER -