The corporate regulation of sexual harassment in Japan

Book Title in Japanese: 雇用・社会保障とジェンダー Chapter Title in Japanese: セクシャル・ハラスメント規制の企業化と男女平等政策への示唆

Corporate governance and law reform in Japan: From the lost decade to the end of history?

Japan is in the midst of massive law reform. Mired in ongoing recession since the early 1990s, Japan has been implementing a new regulatory blueprint to kickstart a sluggish economy through structural change. A key element to this reform process is a rethink of corporate governance and its stakeholder relations. With a patchwork of legislative initiatives in areas as diverse as corporate law, finance, labour relations, consumer protection, public administration and civil justice, this new model is beginning to take shape. But to what extent does this model represent a break from the past? Some commentators are breathlessly predicting the "Americanisation" of Japanese law. They see the triumph of Western-style capitalism - the "End of History", to borrow the words of Francis Fukuyama - with its emphasis on market-based, arms-length transactions. Others are more cautious, advancing the view that there new reforms are merely "creative twists" on what is a uniquely (although slowly evolving) strand of Japanese capitalism. This paper takes issue with both interpretations. It argues that the new reforms merely follow Japan's long tradition of 'adopting and adapting' foreign models to suit domestic purposes. They are neither the wholesale importation of "Anglo-Saxon" regulatory principles nor a thin veneer over a 'uniquely unique' form of Confucian cultural capitalism. Rather, they represent a specific and largely political solution (conservative reformism) to a current economic problem (recession). The larger themes of this paper are 'change' and 'continuity'. 'Change' suggests evolution to something identifiable; 'continuity' suggests adhering to an existing state of affairs. Although notionally opposites, 'change' and 'continuity' have something in common - they both suggest some form of predictability and coherence in regulatory reform. Our paper, by contrast, submits that Japanese corporate governance reform or, indeed, law reform more generally in Japan, is context-specific, multi-layered (with different dimensions not necessarily pulling all in the same direction for example, in relations with key outside suppliers), and therefore more random or 'chaotic'.

Deriatives disclosure in corporate annual reports: bank analysts; perceptions of usefulness

Responding to mixed evidence on the decision-usefulness of annual report disclosures for derivative financial instruments to capital market participants, and concerns identified by practice, this paper examines usefulness in a direct study of user perceptions. Interviews with analysts from Australia’s four major banks reveal essential usefulness, limited by the disclosures’ failure to reflect companies’ actual use of derivatives throughout the period, and inability of users to understand companies’ off-balance sheet risk and risk management practices from information considered generic and boilerplate. The research complements and extends existing archival and survey research and provides new evidence suggesting low-cost ways for increasing usefulness. It supports the International Accounting Standards Board’s disclosure recommendations in its recent Discussion Paper: A Review of the Conceptual Framework for Financial Reporting, but, at the same time, highlights that for these proposed measures to be successful in relation to IFRS 7, they may need to address other issues. The research increases knowledge of the informational requirements of lenders, an important class of financial information user, and supports calls from practice for companies to improve their disclosure of material economic risks.

Sexual harassment and the corporation in Australia and Japan: The potential for corporate governance of human rights

The authors explore the legal and social undercurrents in Australia and Japan which are encouraging corporations to embrace broader social responsibilities. They consider a case study of sexual harassment and its regulation within Australian corporations, uncovering the legal and social conditions that have led to the adoption of sexual harassment policies. The authors propose a model for determining when corporate governance of sexual harassment is likely to be effective and test the model by reference to the experience of sexual harassment in Japan. They draw some conclusions about what the experience of corporate implementation of management of sexual harassment might mean for other areas of human rights.

External administration in corporate insolvency and reorganisation: The insider alternative

This article considers the merits of alternative policy approaches to management of companies in insolvency administration, in particular from an identity economics theoretical perspective. The use of this perspective provides a novel assessment of the policy alternatives for insolvency administration, which can be characterized as either following the more flexible United States Chapter 11-style debtor-in-possession arrangement, or relying on the appointment of an external administrator or trustee to manage the insolvent company who automatically displaces incumbent management. This analysis indicates that stigma and reputational damage from automatic removal of managers in voluntary administration leaders to "identity loss" and that an insider alternative to the current external administration approach could be a beneficial policy change.

Corporate fraud culture: Re-examining the corporate governance and performance relation

We analyse the corporate governance and performance relation, when conditioning on corporate fraud, for fraud firms during 2000 – 2007. Fraud firms are identified as either self- reported fraud events, or subject to regulatory investigation. We use the inverse Mills ratio procedure to account for firms' (unobservable) fraud culture in the dynamic system GMM model of the performance- governance relation. We find that corporate governance is an endogenously determined characteristic that has no causal impact on firm performance when conditioning on fraud. Fraud is a significant regulatory event but its overall economic impact at the firm level is highly variable.

Corporate disclosure in relation to combating corporate bribery: A case study of two Chinese telecommunications companies

This paper investigates the association between global community concerns about bribery activities and anti-bribery disclosure practices by two Chinese telecommunication companies operating internationally, namely China Mobile and ZTE. Based on content analysis of annual reports and global news media articles over a period of 16 years from 1995-2010, the findings suggest that the changes in the level of disclosures by the two major Chinese telecommunications companies were closely associated with the level of international concerns over bribery practices within the Chinese telecommunications industry. This finding indicates that the companies adopt anti-bribery disclosure practices in order to minimise the gap of trust (Social capital) between companies themselves and global stakeholders. In this paper we argue that, for domestic companies in China, culturally constructed social capital, such as guanxi, creates a level of trust between managers and their stakeholders, which obviates the need for managers to disclose anti-bribery performance information. However, for companies operating internationally, as social capital is inadequate to bridge the gap of trust between managers and global stakeholders, managers use disclosures of anti-bribery performance information as a way to minimise such a gap.

Social audit failure: Legal liability of external auditors

In this chapter, we look at the step beyond reporting, to the external audit or assurance function. The role of any audit engagement is to provide a professional opinion on a set of financial or non-financial assertions reported by an organization's management, based on an agreed evaluative framework. Any such opinion is not a guarantee that the underlying report is free from fraud or misstatement. Where an audit opinion on financial statements is incorrect, this is referred to as an audit failure. Specifically, the textbook definition of audit failure has two components: that the financial statements contain a serious error and that the auditor has failed to detect the error due to the auditor's failure during the audit process.

Do stakeholders or social obligations drive corporate social and environmental responsibility reporting? Managerial views from a developing country

Purpose – The purpose of this study is to explore senior managers’ perception and motivations of corporate social and environmental responsibility (CSER) reporting in the context of a developing country, Bangladesh. Design/methodology/approach – In-depth semi-structured interviews were conducted with 25 senior managers of companies listed on the Dhaka Stock Exchange. Publicly available annual reports of these companies were also analysed. Findings – The results indicate that senior managers perceive CSER reporting as a social obligation. The study finds that the managers focus mostly on child labour, human resources/rights, responsible products/services, health education, sports and community engagement activities as part of the social obligations. Interviewees identify a lack of a regulatory framework along with socio-cultural and religious factors as contributing to the low level of disclosures. These findings suggest that CSER reporting is not merely stakeholder-driven, but rather country-specific social and environmental issues play an important role in relation to CSER reporting practices. Research limitations/implications – This paper contributes to engagement-based studies by focussing on CSER reporting practices in developing countries and are useful for academics, practitioners and policymakers in understanding the reasons behind CSER reporting in developing countries. Originality/value – This paper addresses a literature “gap” in the empirical study of CSER reporting in a developing country, such as Bangladesh. This study fills a gap in the existing literature to understand managers’ motivations for CSER reporting in a developing country context. Managerial perceptions on CSER issues are largely unexplored in developing countries.

Moments of flux in intermediary liability for copyright infringement

This chapter provides an overview of a recent shift in regulatory strategies to address copyright infringement toward enlisting the assistance of general purpose Internet Service Providers. In Australia, the High Court held in 2012 that iiNet, a general purpose ISP, had no legal duty to police what its subscribers did with their internet connections. We provide an overview of three recent developments in Australian copyright law since that decision that demonstrate an emerging shift in the way that obligations are imposed on ISPs to govern the actions of their users without relying on secondary liability. The first is a new privately negotiated industry code that introduces a 'graduated response' system that requires ISPs to pass on warnings to subscribers who receive allegations of infringement. The second involves a recent series of Federal Court cases where rightsholders made a partially successful application to require ISPs to hand over the identifying details of subscribers whose households are alleged to have infringed copyright. The third is a new legislative scheme that will require ISPs to block access to foreign websites that 'facilitate' infringement. We argue that these shifts represent a greater sophistication in approaches to enrolling general purpose intermediaries in the regulatory project. We also suggest that these shifts represent a potentially disturbing trend towards enforcement of copyright law in a way that does not provide strong safeguards for the legitimate constitutional due process interests of users. We conclude with a call for greater attention and research to better understand how intermediaries make decisions when governing the conduct of users, how those decisions may be influenced by both state and non-state actors, and how the rights of individuals to due process can be adequately protected.

Duty and Control in Intermediary Copyright Liability: An Australian Perspective

In the internet age, copyright owners are increasingly looking to online intermediaries to take steps to prevent copyright infringement. Sometimes these intermediaries are closely tied to the acts of infringement; sometimes – as in the case of ISPs – they are not. In 2012, the Australian High Court decided the Roadshow Films v iiNet case, in which it held that an Australian ISP was not liable under copyright’s authorization doctrine, which asks whether the intermediary has sanctioned, approved or countenanced the infringement. The Australian Copyright Act 1968 directs a court to consider, in these situations, whether the intermediary had the power to prevent the infringement and whether it took any reasonable steps to prevent or avoid the infringement. It is generally not difficult for a court to find the power to prevent infringement – power to prevent can include an unrefined technical ability to disconnect users from the copyright source, such as an ISP terminating users’ internet accounts. In the iiNet case, the High Court eschewed this broad approach in favor of focusing on a notion of control that was influenced by principles of tort law. In tort, when a plaintiff asserts that a defendant should be liable for failing to act to prevent harm caused to the plaintiff by a third party, there is a heavy burden on the plaintiff to show that the defendant had a duty to act. The duty must be clear and specific, and will often hinge on the degree of control that the defendant was able to exercise over the third party. Control in these circumstances relates directly to control over the third party’s actions in inflicting the harm. Thus, in iiNet’s case, the control would need to be directed to the third party’s infringing use of BitTorrent; control over a person’s ability to access the internet is too imprecise. Further, when considering omissions to act, tort law differentiates between the ability to control and the ability to hinder. The ability to control may establish a duty to act, and the court will then look to small measures taken to prevent the harm to determine whether these satisfy the duty. But the ability to hinder will not suffice to establish liability in the absence of control. This chapter argues that an inquiry grounded in control as defined in tort law would provide a more principled framework for assessing the liability of passive intermediaries in copyright. In particular, it would set a higher, more stable benchmark for determining the copyright liability of passive intermediaries, based on the degree of actual, direct control that the intermediary can exercise over the infringing actions of its users. This approach would provide greater clarity and consistency than has existed to date in this area of copyright law in Australia.