Institutional Ownership and Firm Performance under Stakeholder-Oriented Corporate Governance

This study aimed to reveal the role of institutional investors with shareholder-oriented scopes in a stakeholder-oriented economy such as Japan. With financial globalization, the increasing number of institutional shareholders in Japanese corporations enables us to investigate whether their sharehol...

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Bibliographic Details
Published inSustainability Vol. 12; no. 3; p. 1021
Main Authors Sakawa, Hideaki, Watanabel, Naoki
Format Journal Article
LanguageEnglish
Published Basel MDPI AG 01.02.2020
Subjects
Bailouts
Banking industry
Banks
Corporate governance
Financial institutions
Globalization
Institutional investments
Monitoring
Shareholder activism
Shareholder meetings
Stakeholders
Stockholders
Sustainability
United States > US
Japan
Germany
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Summary:This study aimed to reveal the role of institutional investors with shareholder-oriented scopes in a stakeholder-oriented economy such as Japan. With financial globalization, the increasing number of institutional shareholders in Japanese corporations enables us to investigate whether their shareholder-oriented perspectives are conducive to taking on effective monitoring roles under stakeholder-oriented corporate governance. This study’s sample included large listed firms of the TOPIX 500 in Japan during 2010-2016. Using 2924 firm-year observations, the effect of institutional investors on firm performance was analyzed to test the role of institutional investors in stakeholder-oriented corporate governance. Our study showed that the monitoring role of institutional shareholders, or foreign shareholders, functions effectively in Japanese corporations. In addition, we showed that the monitoring roles of these are expected to strengthen firms through higher growth opportunities. These results implied that institutional shareholders contribute to enhancing sustainable firm performance and constructing sustainable corporate governance mechanisms in a stakeholder-oriented system.
ISSN:2071-1050
2071-1050
DOI:10.3390/su12031021