Agency theory and Japanese corporate governance

Phillip H. Phan, Toru Yoshikawa

Research output: Contribution to journalArticlepeer-review

24 Scopus citations


Agency theory has been used to predict managerial strategic behavior in the past. However, critics have commented that this theory, in its applications, has been too Anglo-American specific. Research in non-Anglo-American settings has been scarce. Recent changes in the Japan Commercial Code and moves by Japanese corporations to access global equity markets allow us to test the veracity of this criticism by examining how Japanese firms respond strategically to the increased requirement for disclosure and transparency; whether they behave in ways congruent with agency theory predictions. Agency theory states that managers who are held accountable for their use of corporate resources will deploy them in ways to enhance stockholder value rather than increase their shares of the economic residual. Thus, we would expect to observe a difference in Japanese managerial behavior accompanying an increased exposure to global capital markets. Using data from Japanese firms, we found some support for the usefulness of agency theory to non-Anglo-American settings when the rules of capital market discipline are allowed to operate.

Original languageEnglish (US)
Pages (from-to)1-27
Number of pages27
JournalAsia Pacific Journal of Management
Issue number1
StatePublished - 2000
Externally publishedYes

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management


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