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A multitude of corporate governance reforms were enacted in Japan from 1997-2005. As a result of one of those reforms, beginning in 2003 Japanese companies had the option of choosing a committee system of corporate governance, one partially modeled on the American system, rather than the auditor system.

On May 14, SPRIE Researcher Robert Eberhart spoke at a SPRIE seminar about his current research assessing the effect of the Japanese reforms and the question of whether the corporate system in Japan will ultimately be converging with the Western model.

We compared two groups of committee system and auditor system companies and found that the firms using committee system governance, the so-called American model, were significantly valued higher as measured by Tobin's q--thirty- and forty-percent higher.

In researching the performance of Japanese companies under the committee system, Eberhart's current study has found significantly (30%-40%) higher Tobin's q scores for those companies following the committee system over those following the auditor system. This observation seems independent of other financial variables differentiating these companies. The research focused on 63 companies in the pharmacueuticals, electronics, and machine industries.

Tobin's q is the ratio of a firm's market cap to the replacement value of its assets. Since the change in Tobin's q was immediate, based on monthly data, this suggests a change in market evaluation, Eberhart noted, since the asset value would not have changed so quickly.

One possibility, Eberhart ventured, is that by opening themselves up to the committee system, management is indicating a confidence in the veracity of the firm's fiscal monitoring system, and the market is responding to that confidence.

Eberhart concluded by noting that these results are preliminary and further research is necessary to precisely determine the nature of these performance differences.

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Iain Johnston is the Laine Professor of China in World Affairs at Harvard University's department of government. He received his Ph.D. from the University of Michigan. His research and teaching interests include socialization in international institutions, the analysis of identity in the social sciences, and ideational sources of strategic choice, mostly with reference to China and the Asia-Pacific region. He is the author of "Cultural Realism: Strategic Culture and Grand Strategy in Chinese History" (Princeton 1995) and "Social States: China in International Institutes, 1980-2000" (Princeton 2008), and co-editor of "Engaging China: The Management of an Emerging Power" (Routledge 1999), "New Directions in the Study of China's Foreign Policy" (Stanford 2006), and "Crafting Cooperation: Regional Institutions in Comparative Perspective (Cambridge 2007).

Graham Stuart Lounge (Room 400)
Encina Hall West

Professor Alastair Iain Johnston Speaker Department of Government, Harvard University
Lectures
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In this session of the Shorenstein APARC Corporate Affiliate Visiting Fellows Research Presentations, the following will be presented:

Mari Ichinomoto, "The Method for Attracting Semiconductor Industries with Fabless Policies in Japan"

Recently most local governments in Japan are exploring overseas firms who have interests to expand their business in Japan. But now other Asian countries are becoming tougher competitors. What can the local governments do to achieve their mission? Is there a good way to compete against other countries in order to achieve their goal?

Takao Isozaki, "Organization Change - Preparation for DBJ's Privatization"

The Development Bank of Japan (DBJ), one of the Japanese governmental financial institutions, will be fully privatized for 5 to 7 years. Isozaki’s research examines what kind of aspects DBJ's workers should take into account as preparation for its privatization process.

Hisashi Kanazashi, "Comparison and Analysis of US-Japan Policies for Innovation"

After catching up with developed countries and experiencing the collapse of the bubble economy, Japan has struggled to recover. The key word during the struggle was “innovation”, and the Japanese government has pushed many reforms to encourage it. However, is the reform for innovation in Japan sufficient? The goal of Kanazashi’s research is to examine it by analyzing the recent trend of start-ups and comparing policies in the United States and in Japan.

Philippines Conference Room

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Corporate Affiliate Visiting Fellow
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Mari Ichinomoto is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08 and 2008-09. She is also an official of the Industrial Recruitment and Location Division, Kumamoto Prefectural Government in Japan, with a mission to promote overseas direct investment into the country. Prior to this position, she was sent to Kumamoto trade promotion office in Singapore as a representative of the Kumamoto Prefectural Government dealing with trade promotion between Asia and Kumamoto. She graduated in foreign studies from Kitakyushu University.

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Mari Ichinomoto Corporate Affiliate Visiting Fellow, Kumamoto Prefecture Speaker
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Corporate Affiliate Visiting Fellow
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Takao Isozaki is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. Prior to joining Shorenstein APARC, he worked at the Development Bank of Japan (DBJ) for seventeen years. Isozaki's experiences at DBJ included policy-based financing, finance planning and coordination, and human resources management. He was also assigned for a time at the Ministry of Economy, Trade & Industry.

Isozaki's latest position at the DBJ was as director in the credit analysis department. he completed his undergraduate studies in law at Tokyo University.

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Takao Isozaki Corporate Affiliate Visiting Fellow, Development Bank of Japan Speaker
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Hisashi Kanazashi is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. Prior to joining Shorenstein APARC, he held positions at the Ministry of Economy, Trade and Industry (METI), government of Japan, for about ten years, where he took charge of policymaking. His latest position at METI was as deputy directory in Small and Medium Enterprise Agency. He did his undergraduate study at Tokyo University, in the faculty of Engineering Science.

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Hisashi Kanazashi Corporate Affiliate Visiting Fellow, Ministry of Economy, Trade & Industry, Japan Speaker
Seminars
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In this session of the Shorenstein APARC Corporate Affiliate Visiting Fellows Research Presentations, the following will be presented:

Atsushi Goto, "What is the Optimum Strategy for Broadcasting Companies?"

Goto’s research will describe the potential risks for broadcasters and then categorize top-tier broadcasters into several groups based on their strategies. Additionally, he will explain the optimum strategy for broadcasters, hypothetically, and the argument that he has made with experts in this area. Finally, Goto will conclude with the outlook of the broadcasting market.

Natsuki Kamiya, "Bilingual Education for Children of Immigrants"

The 1989 revision of Japan’s Immigration Law facilitated an influx of Brazilians to Japan. As a result, there are 50,000 Brazilians in the Shizuoka Prefecture. Although they have Japanese ancestry, their lack of proficiency in the Japanese language makes it difficult for them to assimilate into Japanese society. Kamiya’s research will cover bilingual education in the United States in order to make policies that will help Brazilian children learn Japanese while retaining Portuguese.

Yotaro Akamine, "Produce or Reduce? A Feasibility Study of Introducing Heat Pump Water Heaters as an Environmental Solution in California"

In 2006, a strong environmental regulation, AB32, became effective in California. Akamine’s research shows the feasibility of introducing "heat pump water heater", Japanese commercialized technology, as a solution to the environmental issue, as compared to solar photovoltaic business, which has prevailed in California.

Xiangning Zhang, "The Practices of the American Energy Policies -- American Major Oil Companies' Development Strategies and Practices"

The high oil prices ushered in the third global energy crisis. The United States has issued and put in force a series of new policies and acts to try to establish an energy jurisprudence through legislation. It is now a transitional period in the new energy age, where oil and gas still play a critical role in the energy consumption structure, but alternative resources are getting more attention. Major oil companies are becoming super giants in the integrated energy industry. The United States faces a long road ahead until it reaches parity with its European neighbors in new energy policies and practices.

Philippines Conference Room

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Atsushi Goto is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. Prior to joining Shorenstein APARC, he has worked at Sumitomo Corporation since 1996. He has been in charge of developing new business as well as venture investment in IT industry. He received his BS and MS in Electric Engineering in Kyoto University in Japan.

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Atsushi Goto Corporate Affiliate Visiting Fellow, Sumitomo Corporation Speaker
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Corporate Affiliate Visiting Fellow
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Natsuki Kamiya is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08 and 2008-09. He works for the Shizuoka Prefectural Government, one of the local governments in Japan. He is interested in immigration policy in California. He graduated from Chuo University in Tokyo, where he majored in law.

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Natsuki Kamiya Corporate Affiliate Visiting Fellow, Shizuoka Prefecture Speaker
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Yotaro Akamine is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-08. Prior to joining Shorenstein APARC, he has been with the Tokyo Electric Power Company Inc. (TEPCO) since 1998. He has planned bulk power systems and coordinated plans of electrical power plants. He also estimated CO2 emissions concerning electrical power plants. Following this, he belonged to the Technology Management Group, General Training Center of TEPCO. Yotaro Akamine received his BS, MS and Ph.D in Electrical Engineering from Tokyo University.

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Yotaro Akamine Corporate Affiliate Visiting Fellow, Tokyo Electric Power Company Speaker
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Corporate Affiliate Visiting Fellow
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Xiangning Zhang is a corporate affiliate visiting fellow at Shorenstein APARC for 2007-2008.

Zhang is the Vice President of PetroChina Foreign Cooperation Administration Department, the Director of Circum-Pacific Council (CPC) and a member of the Committee for the Petroleum Association of China(CAPG).

Zhang received both his bachelors and masters degree from Southwest Petroleum University. He is currently a PhD candidate at Chengdu University of Technology. Since graduation, he has been engaged in oil and gas exploration and development both in China and overseas. From 1983 to 1994, he worked in Liaohe Oil Field and the former Petroleum Industry Ministry of the People's Republic of China. From 1995 to 1998, he worked on overseas projects in Papau New Guinea, Peru and other countries. Since 1999, he has worked in PetroChina Foreign Cooperation Administration Department as director and Vice President.

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Xiangning Zhang Corporate Affiliate Visiting Fellow, PetroChina Company Speaker
Seminars
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The Walter H. Shorenstein Asia-Pacific Research Center is pleased to announce that General (ret.) Byung Kwan Kim will join the Center for the 2008-2009 academic year as the first recipient of the Koret Fellowship in the Center’s Korean Studies Program.

General Kim’s expertise in security affairs will be a significant asset to the policy-oriented research activities of our center,” said Professor Gi-Wook Shin, the Center’s director.
While at the Center, General Kim will lead a research project on Korean Peninsula security, including organizing a policy-related conference that will bring Koreans, Americans, and potentially others from the region together to engage in high-level discussions aimed at producing a report for the policymaking community.

The Koret Fellowship, generously funded by the Koret Foundation of San Francisco, was established to bring leading professionals in Asia and the United States to Stanford to conduct research on contemporary U.S.-Korean relations, with the broad aim of fostering greater understanding and closer ties between the two countries.

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How might one think about Chinese power, its dimensions, its effects, and its implications for change in the United States and elsewhere? Dr. David M. Lampton will put China's current trajectory and its conceptions of power in their historical contexts, discuss how China's neighbors are responding to the PRC's growing strength, and explore the vulnerabilities and uncertainties that lie ahead not only for China but the outside world.  
 
Dr. Lampton's work is based on interviews in China, in countries along the PRC's long periphery, and in the United States, as well as extensive documentary research. His book, The Three Faces of Chinese Power: Might, Money, and Minds, was just published by the University of California Press. 

David M. Lampton, Dean of Faculty, is George and Sadie Hyman Professor and Director of China Studies at the Johns Hopkins School of Advanced International Studies and Senior International Advisor on China for the law firm of Akin Gump. Before assuming the post at SAIS in December 1997, he was president of the National Committee on United States-China Relations in New York City for a decade. Dr. Lampton is the author of numerous books and articles on Chinese domestic and foreign affairs. His most recent book is, The Three Faces of Chinese Power: Might, Money, and Minds (University of California Press, 2008), and his articles have appeared in the American Political Science Review, The China Quarterly, Foreign Affairs, Foreign Policy, The New York Times, The Washington Post, and other venues academic and popular. Earlier books and edited volumes include: Same Bed, Different Dreams: Managing U.S.-China Relations, 1989-2000 (University of California Press, 2001) and (editor) The Making of Chinese Foreign and Security Policy in the Era of Reform (Stanford University Press, 2001).

Lampton received his PhD and undergraduate degrees from Stanford University and has lived in the Peoples Republic of China, Taiwan, and Hong Kong. He has an honorary doctorate from the Russian Academy of Sciences' Institute of Far Eastern Studies and is consultant to the Aspen Institute's Congressional Program, the Kettering Foundation, and various corporations and government agencies.

Levinthal Hall

David M. Lampton George and Sadie Hyman Professor and Director of China Studies Speaker the Johns Hopkins School of Advanced International Studies
Conferences
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Michael H. Armacost
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Shorenstein APARC Distinguished Fellow Michael H. Armacost discusses U.S.-South Korea ties and points out challenges ahead. "From free trade to North Korea's nuclear threat," writes Armacost in the Christian Science Monitor, "both sides must move past years of missteps."

Stanford, Calif. - The visit this week of South Korea's new president, Lee Myung Bak, offers a rare opportunity to put the American-Korean relationship back on a more solid footing. President Lee, who won a decisive victory in last December's election, has expressed views on the security alliance, a bilateral free trade agreement, and policy toward North Korea that are thoroughly compatible with US interests. And Mr. Lee's authority was bolstered by his party's substantial victory in legislative elections April 9.

The question is whether Washington is poised to take advantage of this convergence of views.

For the past eight years, a major perception gap between Seoul and Washington has been painfully evident. Our governments often worked at cross-purposes in the six-party talks to denuclearize North Korea. Progressive governments in South Korea encouraged peaceful coexistence with the North through a pattern of unreciprocated engagement. For much of that time, the Bush administration sought to isolate and pressure Pyongyang into relinquishing its nuclear ambitions, and it made little effort to conceal its hopes for a regime change in Pyongyang.

When Washington decided to move its military headquarters out of Seoul in 2003, many Korean officials suspected that the Americans were just eager to get troops out of North Korean artillery range. President Roh Moo Hyun at times seemed interested in carving out a role as a balance wheel between the major powers in Northeast Asia. Meanwhile, the US was preoccupied by problems in the Middle East, and some American officials wondered if the US-Republic of Korea (ROK) alliance could long survive when one party dismissed the North Korean threat while the other viewed it as increasingly menacing.

Now comes Lee, a former mayor of Seoul and Hyundai construction executive with a reputation for tough-minded, pragmatic conservatism, eager to correct what he described as the misguided priorities of past ROK administrations. In a recent meeting with New Beginnings, a group of American policy experts on Korea, Lee appeared determined to accord priority to the alliance with the United States, exact a measure of reciprocity from the North, forestall major economic concessions to the North until it abandons its nuclear activities, and design a more ambitious global role for his country.

Surely Washington welcomes Lee's priorities. The tougher question is whether it can work effectively with him to translate shared aims into concrete results. This will pose three particular challenges.

First, on the nuclear issue, undeniably, bilateral talks with Pyongyang can facilitate diplomatic progress. There are dangers as well. Disconnects with the Japanese have deepened, and their officials occasionally complain about American "betrayals" in the discussions with Pyongyang. The North has consistently sought to use the negotiations to split the US and its allies. Success in the talks requires coordinated diplomacy between the US and the North's neighbors – especially with South Korea. In the past it often appeared that South Korean presidents worried less about Pyongyang's nuclear activities than Washington's possible reactions to them.

Today, there is the danger that South Korean conservatives may fear that Washington will ultimately acquiesce in North Korea's nascent nuclear status. No attempt to contain, let alone eliminate, the North Korean nuclear program can succeed unless the US and ROK governments work closely together. This will require a higher standard of candor and mutual trust in bilateral consultations than has been typical in recent years.

Second, the ratification of the Korea-US free-trade agreement (FTA) is a vital piece of unfinished business. Lee appears prepared to resume imports of US beef (halted due to mad cow disease concerns), essential to moving the FTA forward in Congress. Unfortunately, the Democratic presidential contenders are pandering to special interests on trade issues in a way they will probably later regret. Both sides have strategic and commercial interests at stake. The US stands to gain much more in increased exports from the FTA, while the Koreans hope that liberalizing foreign access to their economy will make them more competitive. So there is much to gain by nailing down this deal. A failure to complete it would be a significant strategic setback for our partnership.

Third, there is the question as to whether our political cycles will again diverge. For the past eight years, the US has been led by one of its most conservative administrations, while South Korea was headed by its most liberal president. Missteps were, perhaps, inevitable. And they have persisted, even though some effective work was done behind the scenes to forge cooperative arrangements on trade and force-deployment issues.

Lee's election signifies a conservative swing in South Korea's politics, while polls suggest the US may be moving in the opposite direction. Thus, a felicitous convergence of US and ROK official perspectives could prove fleeting. Yet the interests we share in expanded commerce, in modernizing our alliance, and in approaching the North with a joint strategy for "denuclearization" are compelling. They transcend partisan politics. They serve our respective national interests. The time to capitalize on them is now.

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