BANK MONITORING, FIRM PERFORMANCE, AND TOP MANAGEMENT TURNOVER IN JAPAN

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Advances in Financial Economics

ISSN: 1569-3732
Series editor(s): Professor Kose John, Professor Anil Makhija, Professor Stephen P. Ferris

Subject Area: Economics

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Document Information:
Title:	BANK MONITORING, FIRM PERFORMANCE, AND TOP MANAGEMENT TURNOVER IN JAPAN
Author(s):	Christopher W Anderson, Terry L Campbell, Narayanan Jayaraman, Gershon N Mandelker
Volume:	8 ISBN: 978-0-76231-027-2 eISBN: 978-1-84950-214-6
Citation:	Christopher W Anderson, Terry L Campbell, Narayanan Jayaraman, Gershon N Mandelker (2003), BANK MONITORING, FIRM PERFORMANCE, AND TOP MANAGEMENT TURNOVER IN JAPAN, in (ed.) 8 (Advances in Financial Economics, Volume 8), Emerald Group Publishing Limited, pp.1-27
DOI:	10.1016/S1569-3732(03)08001-0 (Permanent URL)
Publisher:	Emerald Group Publishing Limited
Article type:	Chapter Item
Abstract:	An inverse relation between performance and managerial turnover at Japanese firms suggests that bank monitoring substitutes for other governance mechanisms (Kaplan, 1994; Kang & Shivdasani, 1995). Morck and Nakamura (1999), however, report that Japanese banks protect their self-interests as creditors rather than the interests of shareholders when appointing corporate directors. We re-examine data on top management changes at Japanese firms and find results consistent with this latter notion. Specifically, management turnover is conditionally related to a firm’s ability to meet its short-term obligations rather than profitability or stock returns. Bank monitoring is therefore not a substitute for mechanisms that directly serve shareholders’ interests.