Been There, Done That: The History of Corporate Ownership in Japan

Japan's corporate sector has, at different times in recent history, been organized according to every major model. Prior to World War II, wealth Japanese families locked in their control over large corporations by organizing them into pyramidal groups, called zaibatsu, similar to structures currently found in Canada, France, Korea, Italy, and Sweden. In the 1930s, the military government imposed a centrally planned command economy, with private property rights retained as little more than a legal fiction. The American occupation force replaced this with a widely held corporate sector similar to that of the United Kingdom and United States. A bout of takeovers and greenmail ensued. To defend their positions, Japanese top executives placed small numerous blocks of stock with each others' firms, creating dense networks of small intercorporate blocks that summed to majority blocks in each firm. These networks, called keiretsu, halted hostile takeovers completely. Although their primary functions were to lock in corporate control rights, both zaibatsu and keiretsu were probably also rational responses to a variety of institutional failings. Successful zaibatsu and keiretsu were enthusiastic political rent-seekers, raising the possibility that large corporate groups are better at influencing government than free standing firms. In the case of keiretsu especially, this rent seeking probably retarded financial development and created long-term economic problems.

The Regulation of Megabanks

Global systemically important banks (G-SIBs) are the largest, most complex and, in the event of their potential failure, most threatening banking institutions in the world. The Global Financial Crisis (GFC) was a turning point for G-SIBs, many of which contributed to the outbreak and severity of this downturn. The unfolding of the GFC also revealed flaws and omissions in the legal framework applying to financial entities. In the context of G-SIBs, it clearly demonstrated that the legal regimes, both in the USA and in the EU, grossly ignored the specific character of these institutions and their systemic importance, complexity, and individualism. As a result of this omission, these megabanks were long treated like any other smaller banking institutions. Since the GFC, legal systems have changed a lot on both sides of the Atlantic, and global and national lawmakers have adopted new rules applying specifically to G-SIBs to reduce their threat to financial stability. This book explores whether the G-SIB-specific regulatory frameworks are adequately tailored to their individualism in order to prevent them from exploiting overly general rules, as they did during the GFC. Analyzing the specific character and individualism of G-SIBs, in relation to their history, normal functioning, as well as their operations during the GFC, this book discusses transformation of banking systems and the challenges and opportunities G-SIBs face, such as Big Tech competitors, climate-related requirements, and the COVID-19 pandemic. Taking a multidisciplinary approach which combines financial aspects of operations of G- SIBs and legal analysis, the book describes G-SIB-oriented legal frameworks of the EU and the USA and assesses whether G-SIB individualism is adequately reflected, analyzing trends in supervisory action when it comes to discretion in the G-SIB context, all in order to contribute to the ongoing discussions about international banking law, its problems, and potential remedies to such persistent flaws

Extended Shareholder Liability for Systematically Important Financial Institutions

Regulators generally have tried to address the problems posed by the excessive risk-taking of Systemically Important Financial Institutions (SIFIs) by placing restrictions on the activities in which SIFIs engage. However, the complexity of these institutions makes such attempts necessarily imperfect. This article proposes to address the problem at its very source, which is the incentives that SIFI owners have to push for excessive risk-taking by managers. Building on the traditional rule of “double liability,” we propose to modify the current (general) rule limiting the liability of SIFI shareholders to the amount of their initial investments in such companies. We propose replacing the extant limited liability regime with a new system that imposes additional liability over and above what SIFI shareholders already have invested in a pre-set amount that varies with a SIFI’s centrality in the financial network. Our liability regime has a number of advantages. First, by increasing shareholder exposure to downside risk, it discourages excessive risk-taking. At the same time, by placing a clearly defined ceiling on shareholders’ total liability exposure, it will not obliterate shareholders’ incentives to invest in the first place. Second, the liability to which shareholders are exposed is carefully tailored to the level of systemic risk that their institution creates. Thus, our rule induces shareholders to account for the negative externality SIFIs can impose without unduly stifling such financial institutions’ role within the financial system and in the wider economy. Third, as the amount of liability is clearly defined ex ante using the rigorous tools of network theory, our rule minimizes the influence of interest groups and the impact of idiosyncratic government decisions. Last, as markets know in advance the amount of liability to which shareholders are exposed, our rule favors the creation of a vibrant insurance and derivative market so that the risk of SIFIs defaults can be allocated to those who can better bear it

Extended shareholder liability for systematically important financial institutions

Regulators generally have tried to address the problems posed by the excessive risk-taking of Systemically Important Financial Institutions (SIFIs) by placing restrictions on the activities in which SIFIs engage. However, the complexity of these institutions makes such attempts necessarily imperfect. This Article proposes to address the problem at its very source, which is the incentives that SIFI owners have to push for excessive risk-taking by managers. Building on the traditional rule of “double liability,” we propose to modify the current (general) rule limiting the liability of SIFI shareholders to the amount of their initial investments in such companies. We propose replacing the extant limited liability regime with a new system that imposes additional liability over and above what SIFI shareholders already have invested in a preset amount that varies with a SIFI’s centrality in the financial network. Our liability regime has a number of advantages. First, by increasing shareholder exposure to downside risk, it discourages excessive risk-taking. At the same time, by placing a clearly defined ceiling on shareholders’ total liability exposure, it will not obliterate shareholders’ incentives to invest in the first place. Second, the liability to which shareholders are exposed is carefully tailored to the level of systemic risk that their institution creates. Thus, our rule induces shareholders to account for the negative externality SIFIs can impose without unduly stifling such financial institutions’ role within the financial system and in the wider economy. Third, as the amount of liability is clearly defined ex ante using the rigorous tools of network theory, our rule minimizes the influence of interest groups and the impact of idiosyncratic government decisions

DO SOME FINANCIAL PRODUCT FEATURES NEGATIVELY AFFECT CONSUMER DECISIONS? A REVIEW OF EVIDENCE. ESRI RESEARCH SERIES NUMBER 78 SEPTEMBER 2018

This paper reviews international evidence on consumer decision-making in retail financial markets. Specifically, we identify and evaluate research from multiple disciplines and methods that links specific features of products to the quality of consumer decisions. The notion of product ‘features’ is broadly defined to include not only product attributes, but also emergent properties such as product complexity and the salience of information disclosure. We document areas of concern from a consumer protection perspective, and describe some common themes, including the inability of consumers to consider all important attributes and whether they can easily discern how the provider is making its profit. We conclude that there is a case for closer integration of empirical evidence and financial regulation

Organizational reforms and gender: Feminization of middle management in Finnish and German banking

In this article, we analyze the longitudinal relationship between organizational reforms (with downsizing elements) and feminization of a specific managerial position. We maintain that two dominant contemporary approaches to reforms and change, i.e. the managerialist literature and its socio-political criticisms, have predominantly been gender-blind. We argue that the unfolding of organizational reforms in bureaucratic business firms cannot fully be understood without reference to how managerial jobs are redefined in relation to each other, and to what are the gendered connotations involved and the type of workforce sought for the newly defined jobs. These gendered demands of reforms must, moreover, be addressed in association with what comes to be seen as the adequate (female and male) supply by top decision-makers. We contend that the gendered patterns inherent in organisational reform can only be discerned if the research takes into account the ways in which reforming is intertwined with developments in the division of labour between men and women, power and authority relations, and norms and values prevalent in the proximate business environment and the society at large. This leads us to suggest analysis which identifies processes of organising as constructed under, but not fully determined by, specific spatial and temporal conditions of gendered social practice. We present in-depth evidence from organizational reforming in two banks, located in societies with significantly divergent gender cultures and gender orders (i.e. Finland and Germany). Through a detailed cross-national comparison, we propose a common fundamental operating mechanism for the reformgender link, and specify a number of societal differences in form. In general, our evidence supports the argument that specific forms of restructuring - even with reductive elements - in fact promote feminization of middle management positions, albeit as a reflection of a development that reproduces gender segregation in new forms. -- In diesem Beitrag wird der Zusammenhang zwischen Organisationsreformen und der Feminisierung einer spezifischen Managementposition aus einer Langzeitperspektive analysiert. Den Ausgangspunkt bildet eine Kritik an derzeit dominierenden Erklärungsansätzen zum Organisationswandel. Sowohl die managementorientierte Literatur als auch ihre sozialwissenschaftliche Kritik schenken deren geschlechtsspezifischen Implikationen zumeist keine Aufmerksamkeit. Wir gehen hingegen davon aus, daß der Verlauf von Organisationsreformen in bürokratischen Unternehmen nicht ohne Einbezug der Neudefinition des Verhältnisses von Leitungspositionen zueinander einschließlich der damit verbundenen geschlechtsspezifischen Konnotationen und des von SpitzenmanagerInnen gewünschten Typus von (weiblichem und männlichem) Personal für die neu-definierten Positionen verstanden werden kann. Eine Untersuchung der sich im Verlauf von Organisationsreformen entwikkelnden geschlechtsspezifischen Muster erfordert die Berücksichtigung der Arbeitsteilung zwischen Männern und Frauen, der Beziehungen zwischen Macht und Autorität sowie der Normen und Werte innerhalb der Unternehmen und der Gesellschaft insgesamt. Notwendig werden Analysen, die Organisationsveränderungen als durch räumlich und zeitlich definierte, geschlechtsspezifische soziale Praktiken konstruiert, aber nicht völlig determiniert, begreifen. Die vorliegende Untersuchung basiert auf Fallstudien in zwei Banken, die in Ländern - Deutschland und Finnland - mit sehr unterschiedlichen Geschlechtersystemen angesiedelt sind. Die Ergebnisse des Vergleichs deuten darauf hin, daß Organisationsreform und geschlechtsspezifische Implikationen in beiden Ländern durch einen ähnlichen Mechanismus miteinander verknüpft sind. Hingegen werden Form und Verlauf der Reformprozesse durch das jeweilige länderspezifische Geschlechtersystem geprägt. Die Ergebnisse zeigen, daß spezifische Formen der Restrukturierung - und zwar auch im Kontext einer Personalreduktion - durchaus die Feminisierung einer Managementposition fördern können. Dies geht aber mit der Herausbildung neuer Formen der Geschlechtersegregation einher.

The Regulation of Megabanks

Global systemically important banks (G-SIBs) are the largest, most complex and, in the event of their potential failure, most threatening banking institutions in the world. The Global Financial Crisis (GFC) was a turning point for G-SIBs, many of which contributed to the outbreak and severity of this downturn. The unfolding of the GFC also revealed flaws and omissions in the legal framework applying to financial entities. In the context of G-SIBs, it clearly demonstrated that the legal regimes, both in the USA and in the EU, grossly ignored the specific character of these institutions and their systemic importance, complexity, and individualism. As a result of this omission, these megabanks were long treated like any other smaller banking institutions. Since the GFC, legal systems have changed a lot on both sides of the Atlantic, and global and national lawmakers have adopted new rules applying specifically to G-SIBs to reduce their threat to financial stability. This book explores whether the G-SIB-specific regulatory frameworks are adequately tailored to their individualism in order to prevent them from exploiting overly general rules, as they did during the GFC. Analyzing the specific character and individualism of G-SIBs, in relation to their history, normal functioning, as well as their operations during the GFC, this book discusses transformation of banking systems and the challenges and opportunities G-SIBs face, such as Big Tech competitors, climate-related requirements, and the COVID-19 pandemic. Taking a multidisciplinary approach which combines financial aspects of operations of G- SIBs and legal analysis, the book describes G-SIB-oriented legal frameworks of the EU and the USA and assesses whether G-SIB individualism is adequately reflected, analyzing trends in supervisory action when it comes to discretion in the G-SIB context, all in order to contribute to the ongoing discussions about international banking law, its problems, and potential remedies to such persistent flaws

The relationship between profit and prosocial behavior : a focus on nudging

The thesis firstly collects behavioral economics literature to support the nudging literature review. Based on the first itineration of the thesis and the challenge proposed by Deborah Small and Cynthia Cryder the purpose of the thesis is to review and relate literature on the topics of consumers’ inferences relating to firms that behave in a prosocial manner. Due to the lack of a concrete nudging review which builds its roots on behavioral economics, we needed a strong foundation to begin developing the topic of nudging as a response to profit-seeking firms who look to behave prosocially and earn a positive response from consumers. In addition, there is absence of research linking literature on consumer inference and reaction with for-profit firms seeking to behave prosocially. Through analyzing all major authors and fathers of both nudging, behavioral economics, and consumer response towards for-profit firms that positively impact society, the thesis compiles relevant information on the perspective of consumers. While focusing on the reactance individuals might and indeed have of firms, nudging is explored as a solution that not only helps consumer’s decision-making but also promotes positive social impact and brings results for firms. The research leads to believe that nudging is indeed a tool that fits all these requirements, as it helps individuals, firms, and societies. The following text looks to showcase how nudging, while being heavily developed as a nearly selfless tool, may also be utilized for the same good while combining prosocial behavior and profit seeking goals

Understanding Ecommerce Consumer Privacy From the Behavioral Marketers\u27 Viewpoint

Ecommerce sales were expected to increase to $4.8 trillion dollars in 2021 for online retailers in the United States. Behavioral marketers increase sales and revenue by targeting potential customers based on the use of ecommerce consumers\u27 personal information. This correlational research study was framed with the theory of planned behavior. The participants were behavioral marketers based in the United States who completed an online survey. The data were analyzed using multiple regressions and analysis of variance analyses to answer the research question. The results of the analysis answered the research question regarding the correlation between behavioral marketer\u27s attitudes, social norms, and perceived behavioral control (PBC), especially concerning the collection of ecommerce consumers\u27 personal information. The results of the analyses indicated attitude is a strong predictor for behavior intention, as indicated by a positive correlation. The ρ value was greater than .05; therefore, the null hypothesis was rejected. The social norms and PBC variables were not significant. Social norms resulted in F (14,18) = 2.298, ρ = .026. The p value is less than .05; therefore, the null hypothesis was accepted. PBC results were F (78,5) = 4.263, ρ = .048. The p value was less than .05; therefore, the null hypothesis was accepted. The findings showed that behavioral marketers have a strong correlation between their attitude and intention to protect ecommerce privacy. Behavioral managers might benefit from this study and contribute to social change by taking the lead in their organizations to change data collection methods to reduce the number of security breaches

Taxation and the Financial Crisis

The financial crisis has opened up a global debate on the taxation of the financial sector. A number of international policy initiatives, most notably by the G20, have called for major changes in the tax treatment of financial institutions and transactions as well as individuals working in the financial sector. This book examines how tax policies contributed to the financial crisis and whether taxation can play a role in the reform efforts under way to establish a sounder and safer financial system. The book looks at the pros and cons of various tax initiatives, including limiting the tax advantages to debt financing, special taxes on the financial sector and financial transactions taxes