Professor Zen'ichi Shishido of Hitotsubashi University in Tokyo, a leading international scholar on Japanese corporate law, gave a lecture September 11 at UC Hastings entitled, “Reverse Engineering SOX vs. J-SOX.”
His talk focused on two similar corporate governance regulations in the United States and Japan: the U.S. Sarbanes-Oxley Act of 2002 (colloquially known as SOX) and its Japanese counterpart, The Financial Instruments and Exchange Act of 2006 (called J-SOX because of its similarity to the American legislation). The event was coordinated by UC Hastings Professors Setsuo Miyazawa and Keith Hand, both of whom are prominent scholars focusing on East Asian legal systems.
Professor Shishido explained that both Acts were introduced by legislatures facing increasing social pressure to combat major fraudulent disclosure scandals (for example, the Enron crisis of 2001). Although the basic structure of SOX and J-SOX is the same, the related regulatory schemes have led to different results. “While SOX fundamentally changed the makeup of the incentive bargain of the corporation,” Shishido said, “J-SOX had no such effect. SOX and J-SOX demonstrate an interesting comparison of the cost-benefit balance of the two pieces of legislation; both have been unsuccessful, but for completely different reasons.”
The UC Hastings East Asia Speaker Series will continue in November with Ms. Guo Jianmei of China.
On Nov. 4, Ms. Guo Jianmei will discuss public interest lawyering and women's rights in China. Guo Jianmei, one of China's first public interest lawyers, has been fighting for women's rights in China for the past 17 years, handling numerous legal aid and public interest litigation cases on behalf of women and conducting extensive research on women's rights protection and legal aid institutions. After graduating from Beijing University in 1983, during a period of great reform in China, Ms. Guo served at the Ministry of Justice, the All China Women's Federation, and the All China Lawyers Association, where she devoted herself to the protection of women's rights and interests. In 1995, after participating in the 4th World Women's Conference in Beijing, Ms. Guo established the Center for Women's Law Studies and Legal Services of Peking University, China's first legal aid clinic dedicated to providing legal aid to women. Ms. Guo also founded the NGOs Beijing Zhongze Women's Legal Counseling and Service Center and Women's Watch-China, a public policy and resource center dedicated to supporting women's rights groups.
In addition to its lecture series, UC Hastings will host and cosponsor a major international symposium in October: “Capital Markets and the Law in Japan: Legal Reform & Corporate Governance."
The Japan Society of Northern California (JSNC) will partner with UC Hastings in collaboration with the Pacific Pension Institute (PPI) to produce its fourth international symposium on corporate governance Friday, October 18, 2013. An international audience with a strong interest in corporate governance practices in Japan is expected to attend. This includes individuals with oversight or fiduciary responsibility for investments in Japan, such as pension plan sponsor representatives and trustees, endowment and foundation professionals and trustees, and investment management specialists. M&A advisory employees interested in how Japan’s changing legal framework will affect merger and acquisition activities in Japan will also find the conference of great value. Lawyers, consultants and accountants working with pension funds, endowments, investment managers and M&A advisors having a Japan – U.S. focus will also benefit.
“For years, foreign investors have criticized the way that Japanese capital markets are regulated, arguing that corporate governance standards in Japan are weak compared to western standards, that the system needs a major overhaul. Foreign investors want to see greater returns to shareholders, and believe that this can be accomplished using provisions such as: increased use of outside directors, disclosure of executive pay, protection of minority shareholders, and the creation of a vibrant market for corporate control that will allow shareholders to take over and restructure publicly traded inefficient companies.
Japan can counter that its system has demonstrated strengths such as long-term planning, low income disparity between the top paid wage earners and the bottom wage earners, and that the western governance standards proved to be of little value in 2008 when western capital markets collapsed.
Yet, today, Japan is engaged in an aggressive macroeconomic experiment—printing trillions of yen in the hopes of creating two percent inflation (not more, not less). And, Prime Minister Abe has promised meaningful ‘structural reforms,’ that will be the basis for Japan’s economic strategy for decades to come. Reforms to the Corporations Law are under consideration.
This conference will be a meeting between academics and practitioners that will discuss the legal reforms under consideration and the effects that they are likely to have.”