Corporate Social Responsibility and Corporate Finance in Japan

verfasst von: Megumi Suto, Prof. Hitoshi Takehara

Verlag: Springer Singapore

Buchreihe : Advances in Japanese Business and Economics

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book explores the linkages between the evolution of corporate social responsibility (CSR) and corporate financing and governance in Japan since the late 2000s. Since the 1990s, increasing economic and financial globalization has steadily eroded the Japanese style of business based on relationships and influenced the awareness and practices of CSR that are unique to Japanese companies. In Japan’s two “lost decades” after the bubble economy, the business model and corporate financing seem to have continued a gradual financial reform toward a more market-oriented system. CSR awareness and practices of Japanese companies have been influenced by social and environmental issues that global society and communities face. Furthermore, the Fukushima nuclear accident in 2011 triggered increasing attention paid to the responsibility of business toward society. In this process, major players in corporate governance and components of governance structure have continued to change. The conventional view of Japanese corporate governance and corporate finance is too narrow to understand this field in Japan. This book is based on empirical research to investigate how multifaceted CSR has aligned with business and finance and has influenced the corporate governance structure of Japanese companies. The findings and discussions in this book act are stepping stones in further research on the linkages between business and society, and provide empirical evidence on changes in Japanese corporate finance and governance.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction: Corporate Social Responsibility and Japanese Corporations

Abstract

Corporate social responsibility (CSR) is globally recognized as one of the core components of corporate strategy for ensuring the long-term value and sustainable growth of a firm. In the rapid globalization of business and finance since the 1980s, business corporations have had unprecedented influence on the societies and communities in which they operate, natural environment preservation, and resource allocation. Alongside financial liberalization and globalization since the 1990s, the linkage between the financial market’s perception of CSP and corporate financing has been attracting interest among researchers. In corporate financing, however, investors and financial institutions might not have a shared comprehensive understanding of CSR with their investees and borrowers, and there could be a perception gap of CSR between investors and financial institutions.

Megumi Suto, Hitoshi Takehara

Chapter 2. Corporate Social Responsibility Awareness and Practices of Japanese Corporations

Abstract

As addressed in Chap. 1, this book aims to investigate how Japanese companies’ awareness of social responsibility aligns with actual responsible practices in business and finance since the 2000s, when the financial system shifted from bank centered to more market oriented. Before presenting empirical analyses to explore the related issues, it is necessary to provide our theoretical approach to corporate social responsibility (CSR) and to sketch the context of CSR awareness and practices of Japanese companies.

Megumi Suto, Hitoshi Takehara

Chapter 3. Responsible Investment and Institutional Investors

Abstract

As discussed in Chapter 1, traditional Japanese corporations have to greater or lesser degrees become familiar with conceptualizing responsible businesses based on ethical self-discipline or guiding management precepts that are passed down in the business over generations, although these concepts of corporate social responsibility (CSR) are likely narrow

Megumi Suto, Hitoshi Takehara

Chapter 4. Corporate Social Performance and Corporate Financial Performance

Abstract

As discussed in Chap. 2, awareness and practices of corporate social responsibility (CSR) have significantly changed since the 2000s by globalization of business and stock ownership structure. Owing to the prolonged economic stagnancy since the beginning of 1990s, revitalization of the Japanese economy became the top agenda for government policy, and the economic responsibility of corporations was interpreted as their primary responsibility. Since the beginning of the 2000s, Japanese corporations seem to have begun to review CSR activities to find a new path to stakeholder relationships in revitalization of business. Interesting research questions are how CSR activities link to economic performance and risk management, and how stakeholder management contribute to performance and risk in the context of Japanese firms in the 2000s.

Megumi Suto, Hitoshi Takehara

Chapter 5. Corporate Social Performance and Ownership Structure

Abstract

In the development of global business and increased cross-border investment, it has become important for corporate governance research to explore the effects of changing ownership structures on corporate social performance (CSP) and related issues.

Megumi Suto, Hitoshi Takehara

Chapter 6. Market Perceptions of Corporate Social Responsibility and Cost of Capital

Abstract

This chapter investigates the influence of market perceptions of corporate social responsibility (CSR) on the cost of capital of Japanese listed firms by examining the relationships between composite corporate social performance (CSP) and the cost of capital in terms of the cost of debt, cost of equity, and weighted average cost of capital (WACC).

Megumi Suto, Hitoshi Takehara

Chapter 7. Corporate Social Responsibility Awareness and Management Forecast Bias

Abstract

For investors, how to gain accurate and unbiased information about future earnings of an investee company is critical to demand a risk premium that is reflected in the expected rate of return. Management earnings forecasts are a major source of information about future earnings and are posited as especially important in the Japanese disclosure system. However, managers might face incentive bias toward opportunistic decisions on the forecast from a short-term view, as there is a conflict of interest between managers and investors about risk premium. The issue of how to mitigate such incentive bias is a key for disciplined pricing in the market by reducing information asymmetry. Management earnings forecasts definitely influence both the quality and quantity of information about future earnings. Responsible management forecasts are the core of the self-disciplining mechanism to provide more accurate and less biased information in the market.

Megumi Suto, Hitoshi Takehara

Chapter 8. Effects of Corporate Social Performance on Default Risk: Structural Model-Based Analysis on Japanese Firms

Megumi Suto, Hitoshi Takehara

Chapter 9. Relationship Between Technological Innovation, Corporate Social Performance, and Corporate Financial Performance

Abstract

This chapter investigates the relationship between technological innovation, corporate social performance (CSP), and corporate financial performance (CFP) of Japanese manufacturing firms. Firms that aggressively focus on research and development have to build investors’ trust and manage firm risk, including financial and social risks, since most such firms need to raise capital steadily. To achieve this risk reduction, managers of firms with technological competitiveness use activities related to their CSR as one of the instruments to manage firm risk. Empirical evidence presented in this chapter shows that both firm-level innovation and CSP are negatively associated with firm risk, which is evaluated in the stock market. Furthermore, results from the mediation analysis suggest that corporate social responsibility works as a mediator to explain the negative association between firm-level innovation and firm risk. This finding implies that mangers of firms with aggressive corporate innovative activities should be more conscious of corporate social activities in the long run to maintain the trust of participants in the capital market.

Megumi Suto, Hitoshi Takehara

Chapter 10. Conclusion—The Future of Corporate Social Responsibility and Corporate Finance in Japan

Abstract

The research in this book highlights managers’ incentives for CSR activities to adapt to changing social and environmental surroundings of business and finance using a stakeholder theory approach. In the context of Japanese firms, we conducted consistent analyses to respond to our research questions on the relationships between CSP and corporate finance and governance during the period of transition toward a more market-oriented system amid the globalization of business and finance. We proposed six research questions and found some interesting results that have implications for the future development of the Japan’s CSR and corporate finance in particular and sustainable development of business in general.

Megumi Suto, Hitoshi Takehara

Backmatter

Titel: Corporate Social Responsibility and Corporate Finance in Japan
verfasst von: Megumi Suto
Prof. Hitoshi Takehara
Verlag: Springer Singapore
Electronic ISBN: 978-981-10-8986-2
Print ISBN: 978-981-10-8985-5
DOI: https://doi.org/10.1007/978-981-10-8986-2