Abstract: The choice of institutions in human evolution is influenced by collective perceptions based on historical experience. The nonZaibatsu jointstock companies were Japans initial practice of the Western jointstock company system. Non Zaibatsu jointstock companies, which rely on capital markets to raise funds, are characterized by “Dividend First Doctrine,” whether controlled by a majority shareholder who is a parttime director or by a majority shareholder who is a fulltime director and operator. The shortterm behavior of excessive dividends caused by the “Dividend First Doctrine” seriously hinders the development of the company. Public opinion attributed the shortterm behavior of “Dividend First Doctrine” to the control of major shareholders. As a result, a negative impression of shareholders control was created in Japanese society. After World War II, a consensus was formed in Japanese society to weaken the legitimacy of shareholders power by establishing a nonmarket governance mechanism based on the collective memory that “control by major shareholders is not conducive to sustainable corporate development”. The historical legacy of corporate governance practices of nonZaibatsu jointstock companies has become an important factor influencing the evolution of corporate governance in Japan.

Key words: Non-Zaibatsu joint-stock companies, corporate governance, majority shareholder control, Dividend First Doctrine, formalized corporate governance