Financialisation in the context of cross-shareholding in Japan: the performative pursuit of better corporate governance

Recent corporate governance reform oriented towards ‘shareholder primacy’ can be considered part of global financialisation. Thus, cross-shareholding in Japan is examined to demonstrate how global financialisation has been extended to a corner of global corporate activities. Despite some fluctuations, Japanese companies have gradually reduced their cross-shareholdings over the past few decades. This study considers the factors that have encouraged Japanese companies to reduce the volume of traditional cross-shareholdings. Based on a careful investigation, this study argues that applying a perspective of performativity is useful in understanding recent corporate actions meant to facilitate ‘better corporate governance’. This perspective holds that the pursuit of better corporate governance, or the establishment of a corporate governance code with disclosure requirements, has been performative to reduce the volume of cross-shareholdings in Japan as part of global financialisation. This study had the following aims. First, based on a review of the literature on financialisation, it argues that the progress of financialisation is indicated by the dissolution of corporate cross-shareholding relationships. Second, a performativity perspective is constructed as the theoretical lens and applied to the Japanese situation to demonstrate how several institutional devices have been crucial in reducing the volume of corporate cross-shareholdings. Third, based on an in-depth case analysis, this study highlights that the relatively recent dissolution of cross-shareholdings has been caused by performative corporate governance reforms requiring detailed corporate disclosure of the related practices. This case study in a non-Western country reveals that global financialisation has been achieved through performative corporate governance reform.