Washington International Law Journal


After more than a decade of attempting to remedy failing banks, rising unemployment, and a shrinking economy, Japan has taken a new approach to economic reform. With the hope of improving corporate profits and international competitiveness, the Japanese Diet passed legislation in May 2002 amending the Commercial Code to allow corporations to adopt an American-style executive officer system. The amendment establishes a workable new framework for more effective corporate governance in Japan and serves as an important early step in what promises to be a long road to reform. These benefits notwithstanding, its impact will be limited by the Amendment's optional nature, a preference for Japanese business practices, the persistence of weak, insider-dominated boards of directors, and renewed suspicion of American corporate institutions following the wave of American corporate scandals.

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