Corporate governance in Japan: A revolution in the making

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What would America fight for?

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Corporate governance in Japan

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TOKYO

THE silence of large Japanese shareholders in Olympus in 2011-12 as the firm plunged into the country’s biggest accounting scandal in decades was one of the affair’s most worrying features. It was left to two foreign fund managers to make public demands for answers after Michael Woodford, the optical-equipment maker’s former president turned whistle-blower, sounded the alarm.

But turning a blind eye is about to get harder. Japanese asset managers will this year sign up to a new stewardship code introduced by the government of Shinzo Abe, the prime minister. Shareholders will be strongly encouraged to monitor firms closely, and speak up when needed.

Another reason for the Olympus scandal was a board of directors packed with yes-men. Here too, the government plans to take action. Mr Abe’s Liberal Democratic Party (LDP) will soon draw up new corporate-governance rules, including guidance for firms to have independent directors ...