After the burst of the speculative bubble in the early 1990s, corporate performance stagnated substantially in the Japanese economy. One of the major reasons for the stagnation was the deterioration of macro fundamentals. In the 1990s, profits of Japanese companies declined because of the decline in asset prices, the Asian crisis, slowdown in growth of Total Factor Productivity (TFP), etc. Accumulated non-performing loans also resulted in sluggish bank lending, which had considerable negative effects on the borrowing companies, especially on small and medium-sized companies. However, even in unfavorable winds of the external environment, there were both winners and losers. Some companies could successfully get out of the crisis situation (“winners”), but others could not (“losers”). The differences in governance structure sometimes determined who was a winner and who was a loser. 1 The purpose of this paper is to examine what determined the performance of Japanese unlisted companies focusing on the governance structure (stock ownership structure) from 1997 to 2002, when the financial crisis occurred in the Japanese economy, and the problem of non-performing loans became serious. In general, there are many small and medium-sized unlisted companies that have potential capacity for growth; on the other hand, many of them have special ownership structures compared with listed companies. Because of no liquidity of outstanding shares, it is extremely rare for general investors to become shareholders of the unlisted companies. Ownership structures of the unlisted companies have many features that are not observed in listed companies. They include extremely high shareholding ratios of specific individuals or a parent companies, or a high percentage of employee stock ownership. When using the data of listed companies, it is not possible to analyze the impact of such extremely biased ownership structures on the company’s performance because of their dispersed ownership structures 2 . Therefore to compare the impact of decentralized and centralized stock ownership structures on corporate performance, it is indispensable to use the data of unlisted companies. In general, there are both good and bad aspects when the control of a company is concentrated on specific individual shareholders or a parent company. A good aspect is that various agency costs associated with the adjustment between stakeholders can be small. For example, it is not easy for owners to monitor the actions of managers in companies where the separation between ownership and management has advanced. In such companies, performance is likely to slowdown when managers take actions against the interests of the owners. However, in companies where the ownership is concentrated, it is difficult for the management to take such actions. To the extent that the ownership is concentrated, interest conflicts rarely deteriorate corporate performance because management decision-making can be carried out speedily.