Corporate vanity metrics – from Germany to Japan
Donald H Chew discuss the agency problem and the metrics that corporate executives should avoid.
The Corporate Governance Crisis: Japan, China & Germany
Donald H. Chew, Jr. explains how poor corporate governance and weak investor control have crippled growth in some of the world’s biggest economies. From Japan’s 30-year stagnation to Volkswagen’s bloated inefficiency and China’s state-manipulated markets, Chew argues that manager-first capitalism has failed.
📉 Conglomerates protect jobs, not capital.
📈 Shareholder activism drives efficiency, growth, and innovation.
This clip explores the agency problem, Michael Jensen’s foundational work on corporate structure, and how investor control—or the lack of it—shapes national prosperity. Chew shares how shareholder-led restructuring in the U.S. powered decades of growth, and why countries like Japan are now turning to American-style corporate governance for revival.
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📘 Get the book: The Making of Modern Corporate Finance by Donald H. Chew, Jr.
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Thank you to our episode partner @columbiauniversitypress6378
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Chapters – Clip: The Corporate Governance Problem in Japan, China & Germany
00:00 – The thread connecting Japan, China, and the U.S. in the 1980s
00:13 – The agency problem: Managers vs. shareholders
00:30 – Michael Jensen and the theory of the firm
00:54 – Managerial preference for size and diversification
01:25 – Why investors want capital reallocated efficiently
01:43 – The failure of conglomerates to optimise investment
01:57 – Case study: Volkswagen’s bloated structure
02:22 – Co-determination in Germany and full employment priorities
02:48 – Consequences of protecting jobs over profits
03:05 – China’s shifting support and Volkswagen’s decline
03:20 – Japanese corporate agenda: growth and full employment
03:44 – Stock buybacks were illegal in Japan until 1997
04:00 – Capital trapped inside Japanese firms
04:20 – Wasteful spending and strategic stagnation
04:32 – Japan’s 30-year slumber: FT article & Kaidan Ren’s statement
04:58 – Shareholder activists as a catalyst for revival
05:13 – Warren Buffett’s investments and foreign capital opportunity
05:24 – The role of American activists in revitalising Japan’s economy