Title: Corporate governance, relational banking and R&D: evidence from Japanese large firms in the 1980s and 1990s

Authors: Hideaki Miyajima, Yasuhiro Arikawa, Atsushi Kato

Addresses: School of Commerce, Waseda University, 1-6-1 Nishi-Waseda, Shinjuku-ku, Tokyo 169-8050, Japan. Faculty of Literature and Social Sciences, Yamagata University, 1-4-12 Kojirakawa, Yamagata-shi, Yamagata 990-8560, Japan. School of Business, Aoyama Gakuin University, 4-4-25 Shibuya, Shibuya-ku, Tokyo 150-8366, Japan

Abstract: We investigate the effects of the Japanese corporate governance structure on corporate investments, especially R&D, dividing Japanese high R&D firms into two groups, i.e. young growing firms and old mature firms. The main bank relationship mitigates the asymmetric information problem for young growing firms. R&D expenditure in the 1990s. Portfolio investors strengthen the cash constraints on R&D, while stable shareholders offset the myopic pressure by portfolio investors. We also show some evidence that stable shareholders induced old mature firms to overinvest during the bubble economy period.

Keywords: j-type corporate governance structure; R&D; asymmetric information; managerial myopia; free cash flow.

DOI: 10.1504/IJTM.2002.003037

International Journal of Technology Management, 2002 Vol.23 No.7/8, pp.769-787

Published online: 10 Jul 2003 *

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