Listing on the NYSE to be disciplined from outside (1998)

Borrowing your discipline from outside

What stands out in this decision is that ORIX went looking outside itself for a framework of restraint before it went looking for growth or funding. Accounting standards and shareholders are, for a manager, most awkward precisely when they are most demanding. Miyauchi Yoshihiko did not avoid that demand; he invited it in as a device against self-satisfaction. A Japanese company with few noisy shareholders finds internal discipline hard to sustain. So borrow outside eyes and let them tighten the management. Reading an overseas listing as a defensive instrument captures the character of the choice.

Inviting in strict standards and outside scrutiny does not always bear fruit. Disclosure is a heavy burden, and there is real danger in being jerked about by quarterly numbers. The line Miyauchi drew was to learn the form of governance from the West while keeping the measure of time long. By whose eyes discipline is guaranteed, and how the short-term demands are reconciled with it — the idea of governing yourself from outside leaves that question intact for Japanese companies still unsure how close to stand to their shareholders.