Publication Type

Journal Article

Publication Date

3-2005

Abstract

The board of directors plays an important role in solving the agency problem between shareholders and management. This paper investigates the relationships between ownership and board structure with the diversification strategy of large Japanese firms. The results show that corporate nominee directors are associated with lower levels of product diversification of their investee firms. This suggests that nominee directors in large Japanese corporations see themselves representing specific interests and therefore investors should pay attention to board composition in order to assess the level of protection they can expect to receive. Even without any apparent agency problem with management, there remains a potential “principal-principal” problem.

Keywords

Corporate governance, ownership structure, board of directors, diversification, Japanese firm

Discipline

Asian Studies | Business Law, Public Responsibility, and Ethics | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Corporate Governance: An International Review

Volume

13

Issue

2

First Page

303

Last Page

312

ISSN

0964-8410

Identifier

10.1111/j.1467-8683.2005.00424.x

Publisher

Wiley

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1111/j.1467-8683.2005.00424.x