Financial Analysis : Japan's Financial Markets

Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to

The ‘principles-based’ model of corporate governance is applied in Commonwealth countries. Under this model companies are required to report that they have followed the governance principles laid down in the codes or to explain why they have not. (Tricker 2012)

Phenomenal growth of interest in corporate governance has emerged in recent years. The body of literature on the subject has grown markedly in response to successive waves of large corporate failures. Furthermore, there have been numerous attempts to define what constitutes ‘good corporate governance’ and to provide guidelines in order to enhance the quality of corporate governance.

In the aftermath of major scandals and bailouts in the United States, the world`s and the public’s confidence in public corporations, has been shaken. With the publicized scandals of Enron and other corporations in the United States, the faith in public corporations fell as fast as the stock market. Investors had no confidence in corporations or in their boards. Measures needed to be taken to form regulations to provide stronger accountability, to prevent these types of scandals from happening and to rebuild the confidence of investors. Corporate governance of publicly traded

Alongside this regulatory response in the United-States, in the United-Kingdom rules of good practice and principles for good corporate governance have emerged in the form of Reports and Codes (even before the Enron crisis occurs). Similarly, the international economic actors also codified rules and principles for a good corporate governance.

A stock market is an auction where investors buy and sell shares of publically traded corporations. We were given $100,000.00 to begin our stock portfolio. We had three weeks to buy and sells stocks. At the end of the three weeks, we were required to liquidate all of our investments to determine our gains or losses.

Reforms have been created to close the gap of corporate governance and financial reporting in order to prevent the reoccurrence of corporate scandals. Congress created a federal bill named the Sarbanes-Oxley (SOX) Act in July 2002 in response to the Enron and WorldCom scandals that introduced major changes to the regulation of corporate governance and financial practice in order to protect the interest of investors and the public (“Sarbanes-Oxley Act Summary and Introduction,” 2003). The Act is extensive in corporate governance, which is a comprehensive theory concerned with the alignment of management and shareholders interest. The sections of the bill cover responsibilities of a public corporation’s board of directors, adds criminal penalties for certain misconduct, and requires the SEC to create regulations to define how public corporations are to comply with the law (Slater, 2002). The SEC has issued more than twenty rules implementing provisions of the Act pertaining to corporate governance, financial reporting, and audit functions. The SEC has worked with NYSE and NASDAQ to harmonize the new Corporate Governance Rules. Throughout the rest of this paper, the more detailed listing requirements of the NYSE and NASDAQ will be discussed. Since the reforms are extensive, these were selected for the discussion: the increased role of independent directors, independent audit committee, independent directors on the nominating/corporate governance committee, the

In Japan corporate ownership is typically concentrated among a stable network of strategically oriented banks and other industrial firms, Corporate governance in Japan is axed on stakeholders such as is done in France but we can spot differences between these two countries. The main reason of that is the historical state-ownership of the companies and the family business that are very developed in this country. Japan has recognized the idea of stakeholders in their codes and principles (Cheung and Chan, 2004).

The impact of culture on the development, implementation and enforcement of recently revised corporate governance regulations and requirements now insists upon organizations today to be increasingly accountable to mandated laws, regulations and standards on several different dimensions. It made public companies more expensive to run. It has been stated that by a company’s fourth year of

Japan gained independence in 660 BC. The national holiday is December 23 (1933), which is the birthday of Emperor Akihito.

Corporate governance represents the structure associated with the management of activities at a firm in a manner that ensures the protection of the shareholders’ residual claims. Further, the concept elaborates the mechanism instituted at the organizational level to ensure that business operations conform to various legal, ethical, and social expectations. China represents one of the most dynamic and fast growing economies across the globe. The expansion of the Chinese market highlights the necessity for the adoption of business practices that reflect not only the national conditions but also international practices (Holmes & Wong, 2015). Issues concerning culture, laws, enforcement, and the constitution of boards in the Chinese environment should be reconsidered for China to sustain its momentum as one of the dominant emerging economies. The “Code of Corporate Governance for Listed Companies in China” provides the legal framework that underlines the structure approved for Chinese businesses (Holmes & Wong, 2015).

In Jun 2015, corporate governance code was introduced where Japanese corporate needs to give explanation on the objective and rationale of stock cross holding and providing information on nomination and remuneration policy for broad member appointment as a result of proactive management –the corporate profit raised.

Abstract Corporate governance Organization for Economic Co-operation and Development (OECD) principles, objectives and standards. Transparency in doing business and its impact on the business performance. Background of good transparency. Transparency guidelines which can enhance the performance. Transparency’s impact. Corporate Governance Disclosure. Criteria to be considered for the strong

The Bank of Japan (BOJ) was founded in June, 1882 and started to operate in October of the same year. The BOJ’s top decision-making body is called “the Policy Board”, which decides its operations and sets up guidelines as to the monetary policy. The Policy Board is composed of nine members; a governor, two deputy governors and six executive directors. The majority rule applies to the board decision-making. As for the process of appointments of the Policy Board members, the Cabinet first appoints them, and then it has to have the Diet approve the appointment (“Organization”).

Companies better understand how good corporate governance contributes to their competitiveness. Investors – especially collective investment institutions and pension funds acting in a fiduciary capacity – realise they have a role to play in ensuring good corporate governance practices, thereby underpinning the value of their investments. In today’s economies, interest in corporate governance goes beyond that of shareholders in the performance of individual companies. As companies play a pivotal role in our economies and we rely increasingly on private sector institutions to manage personal savings and secure retirement incomes, good corporate governance is important to broad and growing segments of the population. The review of the Principles was undertaken by the OECD Steering Group on Corporate Governance under a mandate from OECD Ministers in 2002. The review was supported by a comprehensive survey of how member countries addressed the different corporate governance challenges they faced. It also drew on experiences in economies outside the OECD area where the OECD, in co-operation with the World Bank and other sponsors,