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The Structure of Corporate Ownership in Japan



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    • Board of Governors of the Federal Reserve System, Washington D.C. I am grateful to seminar participants at the University of Pittsburgh and the Federal Reserve Bank of Chicago Bank Structure Conference, and to Takeo Hoshi, Anil Kashyap, Steven Sharpe, and Paul Clyde for helpful comments. Kelli Mock provided excellent research assistance. The Japanese data used in this study are from the NEEDS database obtained from The Japan Economic Journal (Nihon Keizai Shimbun, Inc.). The views expressed herein are those of author and not necessarily those of the Federal Reserve System.


I examine the structure of corporate ownership in a sample of Japanese firms in the mid 1980s. Ownership is highly concentrated in Japan, with financial institutions by far the most important large shareholders. Ownership concentration in independent Japanese firms is positively related to the returns from exerting greater control over management. This is not the case in firms that are members of corporate groups (keiretsu). Ownership concentration and the accounting profit rate in both independent and keiretsu firms are unrelated. The results are consistent with the notion that there exist two distinct corporate governance systems in Japan —one among independent firms and the other among firms that are members of keiretsu.

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