Abstract
This thesis examines issues associated with the interaction of government and
financial institutions in the operation of a company through the board of directors in
Japan and Taiwan. Specially, it highlights the relationships between a company, the
main bank system, and the system of amakudari (appointing retired bureaucrats to
the board of public companies). The focus is on why government and financial
institutions intervene in the operation of a company, and whether the intervention of
government and financial institutions is related to the subsequent operation of a
company through the board of directors. The empirical results suggest that
governments and financial institutions tend to appoint representatives to the board in
order to help troubled companies. On the other hand, a negative relationship is
established between the presence of retired bureaucrats (amakudari) and subsequent
firm performance and the degree of internationalisation. Thus, while the system of
amakudari may use its power in an attempt to save troubled companies, the argument
that monitoring ability of the board may be jeopardised to the detriment of firm
performance and the degree of internationalisation is supported. The empirical results
also demonstrate that intervention of governments and financial institutions is an
integral part of the operation a company in Japan and Taiwan.
Furthermore, with the latest reform of corporate governance in Taiwan, the thesis
also introduces the institutional background of incentive payments and
sub-committees and examines whether the level and the structure of top executives'
compensation and incentive payments are related to firm performance and the
corporate governance mechanism. The empirical results indicate that the alignment
between executives' and shareholders' interests is not less efficient in
government-linked companies (GLCs) compared to non-government-linked
companies (non-GLCs). Additionally, although the Taiwanese authorities have
started to reform corporate governance in Taiwan, the grants of incentive payments
to top executives are not necessarily related to performance or the corporate
governance mechanism, such as the ratio of outside directors.
