Japanese Model

MODELS OF
CORPORATE
GOVERNANCE
INTRODUCTION
Corporate governance has emerged as a

process or system to ensure that the
company managed in the best interest of all
stakeholder . Corporate governance has been
successful in attracting a good deal of public
interest because of its obvious importance for
the financial health of the corporation .
MEANING
To understand the concept of corporate governance, the

two terms, namely, Corporate and governance need
to explained separately. A Corporate means a legal
entity that exists independent of the person who have
formed it and is vested with many of the rights given to
the individuals .On the other hand , the
termGovenances has been derived from the word
gubernare which means to rule or steer. Governance
can also defined as vesting power in a group of people
to make and enforce law for a given country or an area.
DEFINITION
Corporate governance is about promoting corporate
.
[ wolfensonhn]
fairness , transparency and accountability
Corporate governance is the system of rules, law and

factor that control operations of a company
[ Gillar and starks ]
FEATURES
Represen
t
framewo
rk
Used to
monitor
the
performa
nce
Guides
stakehold
er
Wellfunctioning
of markets
Rule and
procedur
es
THEORIES OF CORPORATE
GOVERNANCE
The
Stakeholder
Theory
The Agency
Theory
The
Stewardship
Theory
1. The Agency Theory : This theory provides the basic

theoretical base of corporate governance . The theory is
based the concept of separation of Ownership and
control . According to this theory , the manager work as
a agent
and he used the fund according to the shareholder .
2. The Stewardship Theory : The theory is an alternative

available against the Agency Theory . It rule out the
concept of conflict of interest between the managers
and the owners . This theory establishes that the
manager are trustworthy and not prone to
misappropriate the fund of the investors . This theory
also known Trusteeship Theory .
MODELS
1. The Outsider
Model
(A) AngloAmerican /AngloSaxon Model
3.The Family Based

Model
2. The Insider
Model
(A) German Model
(B)Japanese
Model
I. The Outsider Model
This model is prevalent in the U.S.A, the U.K ,

Canada and Australia.
(A) Anglo-American Model : This model also
called a Anglo - saxon model and is used as
the basis of corporate governance in some
commonwealth countries .The shareholder
appoint director , Who in turn ,appoint the
manager to manage the business.
II . The Insider Model
(A) German Model: This is also called 2tier

board model as there are to board viz. the
supervisory board and the management board
. It is used in countries like germany ,
switzerland it also called a continental europe
model . Usally a large majority of shareholder
are bank and financial institution.
(B) Japanese model
This model is also called as the business network

model. Usually the shareholder are bank/financial
institutions ,large family shareholder , corporate with
cross shareholder. There is supervisory board which
made up of board of director and a president , who
are jointly appointed by shareholder and
bank/financial institution .The Japanese model
includes player , namely the main bank ,affiliated co.
board of directors, executive and the government.
This model is also called the relationship model as it
work with the support of bank and the government .
Shareholde
r
Appoint
Supervisory
Board (including
president)
Appoints &
Intervenes
in
Contingenc
y
Main Bank
President of
sup . Board
Provide
consultatio
n
Executive
committee
Appoints
Managers
Owns/provides Loan and

Equity
Company
JAPANESE MODEL OF CORPORATE GOVERNANCE
FEATURES
1. Small Dominant Group : The Japanese model
are comprises a small no. of dominant group .
Most of these group are diversified and
vertically integrated by cross share holding.
2. Dominant Role Of Government : In Japanese

model , government plays an important of
supervision and control over corporate
activities.
3.Unitary Board Of Director : The structure of board

of directors in Japanese model is the unitary board
where all important decision are taken by the entire
board.The ultimate power to oversee the company
s functioning lies with the Board of directors.
4.Employee Participation : Long serving and sincere

employees are offered member ship of the Board of
Directors. Senior manager and former employee
account of 90% of the company directors.
5. Contingency approach : Banks and

financial institution do not exercise any
direct power of company as long as the
company is run successfully in term of
growth and market share.
THANK YOU

Japanese Model

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Japanese Model

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MODELS OF

Corporate governance has emerged as a

To understand the concept of corporate governance, the

Corporate governance is about promoting corporate

fairness , transparency and accountability

Corporate governance is the system of rules, law and

[ Gillar and starks ]

1. The Agency Theory : This theory provides the basic

2. The Stewardship Theory : The theory is an alternative

3.The Family Based

I. The Outsider Model

This model is prevalent in the U.S.A, the U.K ,

II . The Insider Model

(A) German Model: This is also called 2tier

(B) Japanese model

This model is also called as the business network

Owns/provides Loan and

JAPANESE MODEL OF CORPORATE GOVERNANCE

2. Dominant Role Of Government : In Japanese

3.Unitary Board Of Director : The structure of board

4.Employee Participation : Long serving and sincere

5. Contingency approach : Banks and

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