The effect of corporate governance on firms’ decent work policies in Japan

Abstract

It is often argued that globalization of financial markets leads to change in firms’ human resource practices and employees’ well‐being. To examine the effect of corporate governance on employees’ well‐being, we examine the determinants of firm policies on decent work. Decent work was proposed as a goal by the International Labour Organization, and includes such dimensions as ‘work in conditions of freedom’, ‘equity in work’ and ‘security in work’. We develop a scoring system for firms’ policies on decent work using data on 1258 of Japan's listed firms in 2015. Using this unique dataset, we examine the effect of foreign ownership and outside director ratio on these scores. There is a positive relationship between these corporate mechanisms and firms’ policies. It is suggested that decent work may be promoted by a change in corporate governance.