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Abstract Corporate governance can be defined as a system that constitutes an institution that constrains relations between corporate managers and various stakeholders, including shareholders, creditors, workers, suppliers, and customers. Under this broad definition, corporate governance is a system of various sub-systems that are complementary to one another. This chapter focuses on two sub-systems of Japanese corporate governance: corporate finance and human resource management. After briefly documenting the characteristics of the Japanese corporate governance in these two sub-systems, the chapter discusses how each sub-system has been going through substantial changes in recent years. Examining the data for fifty-eight listed companies, the evidence shows some degree of complementarity between the two sub-systems. The firms that have a non-traditional ownership structure (especially high with foreign ownership) seem to have more non-traditional human resource management practices.
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