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Unstash the Cash! Corporate Governance Reform in Japan

Author

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  • Ms. Chie Aoyagi
  • Mr. Giovanni Ganelli
Abstract
Japan’s high corporate savings might be holding back growth. We focus on the causes and consequences of the current corporate behavior and suggest options for reform. In particular, Japan’s weak corporate governance—as measured by available indexes—might be contributing to high cash holdings. Our empirical analysis on a panel of Japanese firms confirms that improving corporate governance would help unlock corporate savings. The main policy implication of our analysis is that comprehensive corporate governance reform should be a key component of Japan’s growth strategy.

Suggested Citation

  • Ms. Chie Aoyagi & Mr. Giovanni Ganelli, 2014. "Unstash the Cash! Corporate Governance Reform in Japan," IMF Working Papers 2014/140, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2014/140
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    References listed on IDEAS

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    Cited by:

    1. Mariana Colacelli & Emilio Fernández Corugedo, 2018. "Macroeconomic Effects of Japan’s Demographics: Can Structural Reforms Reverse Them?," IMF Working Papers 2018/248, International Monetary Fund.
    2. Asano, Akihito & Tyers, Rod, 2015. "Third Arrow Reforms and Japan’s Economic Performance," Conference papers 332617, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Mr. Joong S Kang, 2014. "Balance Sheet Repair and Corporate Investment in Japan," IMF Working Papers 2014/141, International Monetary Fund.
    4. Davide Porcellacchia, 2016. "Wage-Price Dynamics and Structural Reforms in Japan," IMF Working Papers 2016/020, International Monetary Fund.
    5. Galen Sher, 2014. "Cashing in for Growth: Corporate Cash Holdings as an Opportunity for Investment in Japan," IMF Working Papers 2014/221, International Monetary Fund.
    6. Allen, Cían, 2019. "Revisiting external imbalances: Insights from sectoral accounts," Journal of International Money and Finance, Elsevier, vol. 96(C), pages 67-101.
    7. Mr. Giovanni Ganelli & Naoko Miake, 2015. "Foreign Help Wanted: Easing Japan’s Labor Shortages," IMF Working Papers 2015/181, International Monetary Fund.
    8. Ms. Yuko Hashimoto & Mr. Noriaki Kinoshita, 2016. "The Financial Wealth of Corporations: A First Look at Sectoral Balance Sheet Data," IMF Working Papers 2016/011, International Monetary Fund.
    9. Kang, Sunmin & Hwang, Intae & Song, Sooyoung, 2018. "Cash hoarding: Vice or virtue," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 53(C), pages 94-116.
    10. Asano, Akihito & Tyers, Rod, 2019. "Japan's oligopolies: Potential economy wide gains from structural reforms," Economic Modelling, Elsevier, vol. 82(C), pages 361-375.
    11. John Buchanan & Dominic H. Chai & Simon Deakin, 2018. "Unexpected Corporate Outcomes from Hedge Find Activism in Japan," Working Papers wp494, Centre for Business Research, University of Cambridge.
    12. Cuong, Ly Kim & Shimizu, Katsutoshi & Cui, Weihan, 2021. "The determinants of negative net leverage policy: New evidence from Japan," Economic Modelling, Elsevier, vol. 97(C), pages 449-460.
    13. Mai Dao & Chiara Maggi, 2018. "The Rise in Corporate Saving and Cash Holding in Advanced Economies: Aggregate and Firm Level Trends," IMF Working Papers 2018/262, International Monetary Fund.

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    More about this item

    Keywords

    WP; firm; cash holding; holding; cash; Japan; corporate cash holdings; corporate governance; vestee company; governance index; company disclosure; governance attributes covering; Currencies; Market capitalization; Stocks;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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