Financial structure and corporate behavior in Japan and the US: insulation versus integration with speculative pressures

It is argued that US policy-makers should insulate corporate decision-making by strengthening employee-stakeholders role in corporate governance to reduce financial speculation. The finance theory states that speculation supports stability by converting information into prices. However, in inefficient financial markets, speculation may distort economic goals rather than optimize the use of resources. A comparative study of Japanes and US corporate behaviors shows that while Japanese firms are insulated, US firms are becoming increasingly integrated into the speculative financial system.
1. Introduction Since about the mid-1970s, slowing world growth and increasing international competition have created tremendous pressures toward corporate adjustment in advanced capitalist economies. While nowhere have the resulting changes [...]