Japan: Japanese Corporate Governance

This chapter aims to analyze Japan’s corporate governance system’s evolution and characteristics, especially considering the reforms initiated in 2012. The focus is on understanding the peculiarities of this governance model, which combines aspects of traditional Japanese management with market-oriented governance characteristics. The method used in the research consists of a systematic review of theoretical and empirical literature. This approach allows for a comprehensive analysis of governance structures and management systems in the Japanese context, identifying the relationship between governance aspects and stakeholder interests. The main results indicate that the Japanese corporate governance model is characterized by a hybrid approach, mixing shareholder- and stakeholder-oriented characteristics, reflecting the complexity of the country’s social and economic relations. Among the peculiarities identified are the priority given by managers to the benefit of employees rather than shareholders and the apathy of silent shareholders in monitoring directors’ performance. This has led to a governance structure where managers focus on the well-being of employees, resulting in fewer conflicts of interest and agency problems. Furthermore, the research highlights that organizational culture and governance practices remain resilient despite the reforms, showing resistance to more radical changes. The adoption of governance codes, such as “Comply or Explain,” while promoting improvements in areas such as sustainability and diversity, still does not provide sufficient innovative guidelines to increase the market value of companies in the long term. The analysis concludes that the transition to a shareholder-oriented governance model is taking place gradually and cautiously, reflecting Japanese business culture’s deep-rooted traditions and values.