We examine how global institutional investors interact with domestic norms in shaping the consequences of governance reform. Using Japan’s “Womenomics” reforms as a policy shock that increases the visibility of gender diversity and panel regressions with firm and year fixed effects, we show that firms with higher Big Three institutional ownership experience larger increases in board gender diversity following the reform, primarily through director replacement rather than board expansion. We further find that firms more exposed to increases in board gender diversity experience higher levels of externally reported governance-related incidents, especially in male-dominated industries and among more visible firms. These increases are not accompanied by systematic declines in firm performance or governance quality indicators. Convergence in governance practices therefore does not necessarily imply convergence in how such changes are interpreted across institutional environments. We complement the analysis using instrumental variable estimations and a range of robustness checks.

How firms undertake system-level corporate governance change under cross-border pressure remains poorly understood. We examine when such pressure leads to governance architecture reconfiguration, focusing on Japanese firms’ adoption of the “audit committee” system. Drawing on the willing-and-able framework, we argue that responses depend on whether decision makers perceive a governance architecture as both salient and feasible within existing stakeholder-oriented structures. Using panel data on Japanese listed firms (2015–2023), we find that Anglo-American foreign ownership, particularly by active investors, increases adoption likelihood. These effects are stronger in weaker disclosure environments and weaker where stakeholder ties are more embedded. Adoption is associated with substantive board restructuring rather than symbolic compliance. Overall, governance reform proceeds through bounded, context-dependent reconfiguration rather than convergence. The results are robust to a difference-in-differences specification and to using peer restatements as a plausibly exogenous shock to (active) foreign investors’ concerns about the effectiveness of the traditional governance system.

Status: Data collection and preliminary analysis

This project investigates whether firms that do not adopt Japan’s “three committees” system nevertheless strengthen their existing governance arrangements in response to governance reforms adopted by peer firms. While traditional diffusion literature focuses on how new practices achieve dominance through direct adoption, we examine a corporate “sailing ship effect”, whereby the threat of a novel governance model motivates defenders of traditional structures to innovate and optimize their existing frameworks to preserve legitimacy. By analyzing the competitive dynamics between legacy and emergent governance forms, the study reveals how regulatory updates can catalyze widespread institutional upgrading, even among firms that actively resist direct convergence.

How do reputational events experienced by one firm influence the behavior of other firms connected through common ownership? We argue that common ownership generates ownership-linked reputational exposure effects, whereby reputational gains and losses experienced by one portfolio firm influence the behavior of ownership-linked peers. We examine this argument in the context of gender diversity in Japan. Using selection into the Nadeshiko Brand as a positive reputational signal and publicly reported gender-inequality incidents as a negative reputational signal, we analyze how firms respond to reputational events experienced by peer firms connected through common ownership. Using data on Japanese listed firms from 2009 to 2023 and a staggered difference-in-differences design, we find that firms become more likely to publicly apply for the Nadeshiko Brand and increase female board representation following Nadeshiko recognition among ownership-linked peers. In contrast, firms become less likely to pursue public recognition following gender-inequality incidents experienced by ownership-linked peers while simultaneously increasing female board representation. Prior research has primarily examined how common owners shape firm behavior through direct mechanisms such as stewardship and public announcements. Our findings identify an additional channel through which common ownership shapes firm behavior through managerial mimicry and reveal that firms distinguish between public visibility and substantive governance adaptation when responding to positive and negative reputational signals.