A Comparative Study on the effectiveness and Limitations of Corporate Governance in Japan, United States, UK, Germany and France

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The first aim of the study has been achieved by proving that corporate governance may be a necessary condition for long-term corporate performance but not a sufficient condition. Two typical Japanese sample firms, Toyota and Canon, have no outside directors but are superior in nearly all key performance indicators to their respective rival US firms of GM and Xerox. Foreign investors maintain considerable shareholdings in the said Japanese companies Available evidence also indicates that the Japanese firms that have adopted the optional Board Structure with the three Committees show lower performance records compared with those with the traditional Board structure. This shows that corporate governance alone does not lead to higher results. In the United States, firms that put a premium on customer satisfaction by assuring employee welfare have also shown higher performance. Such firms are Johnson & Johnson, Southwest Airlines in the US, John Lewis in the UK, Bertelsmann in Germany to cite only a few cases.The second objective of the research was to prove the hypothesis that other factors : value, culture, ethics and strategy play equally important roles in the sustainable performance. This has also been born out by firms with outstanding performance in Japan, US, UK, Germany and France including the said companies including those indicated above.In conclusion firms that emphasize shareholder primacy do not seem to deliver higher long-term records. In the worst case, excessive emphasis on shareholder wealth may end up in serious economic debacles such as sub prime or Enron incidents.