The crisis of Japanese retailing at the turn of the millennium: a crisis of corporate governance and finance

Abstract

The year 2000 saw a sudden rise in failures of prominent Japanese retailers. With problems of corporate finance and governance being pointed out as early as the 1970s, the recent problems as well as the continuous rise of companies up to then have to be explained. This article contends that a major explanatory factor is the weakening of the existing stable relationships between retailers and financial institutions. Banks functioned as lenders, shareholders and providers of management resources. Changes in the banking sector led to changes in the relationship at the end of the 1990s. Problems in corporate governance surfaced that might result in a major reorganization of the Japanese retail scene.