U.S. and Japanese Models of Corporate Governance:
Corporate governance is broadly defined as the system by which business corporations are directed and controlled. A corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation such as the board of directors, executives and managers, shareholders, and other stakeholders. Corporate governance spells out the rules and procedures used to make decisions on corporate affairs, thus providing the structure through which company objectives are set and the means of attaining those objectives while monitoring performance (What is corporate governance, 2003).
More narrowly interpreted, corporate governance refers to the relationship of a company to its shareholders and society. It focuses on promoting corporate fairness, transparency, and accountability รป at least in the idealized sense of the term (Anderson, Fox, Twomey, & Jennings, 1998; Miller & Jentz, 2000). Corporate governance has become a topic of enormous significance in the United States in recent years due to a number of corporate scandals (e.g., Enron, WorldCom, Arthur Andersen, Tyco) and Congressional reaction to those scandals which called for new standards and new regulatory strategies designed to improve corporate ethics (Royster, 2003).
The United States is not the only country in which corporate governance has become a significant topic. Japan, a country that in the 1990s experienced a number of economic debacles due to corporate collapses and failures, has also begun to address questions of corporate governance and to focus on developing new and more stringent regulatory frameworks that will shape the ways in which corporations are required to perform (Japan Corporate Governance Forum, 1998).
This report will compare and contrast the corporate governance structures and principles in Japan and the United States. It will be ar...