We construct a governance index based on several attributes known to be associated with good corporate governance. After checking that the index is positively associated with standard indicators of firm performance, we use it to evaluate the returns on governance-sorted portfolios. Our main...

Consistent with a bank-centered governance system, Japanese firms exhibit an exceptionally low level of performance variability. The increased involvement of foreign investors motivated by shareholder value is thus likely to have triggered a major shift in their risk-taking behavior. My results...

We analyze the role of board age on firm performance using a large sample of Japanese firms. The results reveal the existence of a significant negative relationship. After controlling for endogeneity using firm size as instrument, the effect of board age is found to be more significant,...

We analyze the role of board age on firm performance using a large sample of Japanese firms. The results reveal the existence of a significant negative relationship. After controlling for endogeneity using firm size as instrument, the effect of board age is found to be more significant,...

We analyse the structure of corporate boards in Japan to determine whether they are matched to each firm's specific needs. Consistent with US findings, our results show that board size is positively related to firm size and firm complexity, and negatively related to monitoring costs. However,...

Divestitures have the potential to create shareholder value by helping firms optimize their portfolio of assets. Even so, firms do not necessarily take up divestitures because of agency problems. In fact, large controlling shareholders may prefer to extract private benefits of control at the...

The difficulty to measure the long-term benefits of R&D expenditures and the distortions induced by R&D accounting suggest that R&D-intensive firms could be undervalued. Using several methods commonly-applied to detect the abnormal returns associated with mispricing, we find no evidence that the...

We examine the influence of ownership concentration on payout policy in Japan. According to the monitoring hypothesis, large shareholders prefer higher dividends to mitigate the agency cost of free cash flows. In contrast, the rent extraction hypothesis assumes that large shareholders derive...

The difficulty to measure the long-term benefits of R&D expenditures and the distortions induced by R&D accounting suggest that R&D-intensive firms could be undervalued. Using several methods commonly-applied to detect the abnormal returns associated with mispricing, we find no evidence that the...

We use Keiretsu affiliation to analyze the dividend policy of Japanese firms. Assuming that Keiretsu membership provides monitoring benefits and reduces information asymmetries between managers and investors, we test (1) whether dividend changes are more sensitive to growth opportunities for...