Sn. Kaplan et Ba. Minton, APPOINTMENTS OF OUTSIDERS TO JAPANESE BOARDS DETERMINANTS AND IMPLICATIONS FOR MANAGERS, Journal of financial economics, 36(2), 1994, pp. 225-258
This paper investigates the determinants of appointments of outsiders
- directors previously employed by banks (bank directors) or by other
nonfinancial firms (corporate directors) - to the boards of large nonf
inancial Japanese corporations. Such appointments increase with poor s
tock performance; those of bank directors also increase with earnings
losses. Turnover of incumbent top executives increases substantially i
n the year of both types of outside appointments. We perform a similar
analysis for outside appointments in large U.S. firms and find differ
ent patterns. We conclude that banks and corporate shareholders play a
n important monitoring and disciplinary role in Japan.