Ammar

Question No. 1- What are the industry differences in US Corporate Governance and Japanese Corporate Governance?

In each country, the corporate governance structure has certain characteristics or constituent elements, which distinguish it from structures in other countries.

Equity financing is a common method of raising capital for corporations in the US.

There is a causal relationship between the importance of equity financing, the size of the capital market and the development of a corporate governance system. The US is the world’s largest capital market Institutional investors also play an important role in both the capital market and corporate governance in the US

Players in the US model include management, directors, and shareholders. The board of directors of most corporations that follow the model includes both “insiders” and “outsiders”.

A synonym for insider is executive director; a synonym for outsider is non-executive director or independent director US boards are generally smaller than boards in Japan

In the US corporate governance is concerned with the narrow goal of ensuring that firms maximize the wealth of shareholders. In Japan firms are concerned with a broader group of stakeholders, including employees, suppliers, customers and others as well as shareholders.

In the U.S corporate governance is concerned with ensuring the firm is run in the interests of shareholders and its objective is to create wealth for them. If firms maximize the wealth of their shareholders and individuals pursue their own interests then the allocation of resources is efficient in the sense that nobody can be made better off without making somebody else worse off.

The Japanese model is characterized by a high level of stock ownership by affiliated banks and companies; In Japan very little attention is paid to shareholders. Equity financing is important for Japanese corporations. However, insiders and their affiliates are the major shareholders in most...