ABSTRACT
As the Japanese economy experienced long-term stagnation starting in the 1990s, inefficiency of Japanese firms was pointed out as its structural cause. If people see Japanese firms as stakeholder-oriented firms, they can consider that there is rationality behind the observed facts concerning Japanese firms corporate finance that have been the subject of criticisms based on the shareholder model. Modern corporations are operated not only for shareholders, but also for various other stakeholders including employees, customers, vendors, and communities. The boards of directors of Japanese firms are considered to indeed provide a place for various stakeholders to express their voice to the firms management. Their boards of directors are thus expected to supervise corporate management as representatives of all stakeholders. It is then argued that cultural and environmental factors in Japan make it easy for this autonomous governance mechanism to function properly.
