Corporations are the driving force behind any market economy, and their proper behavior is crucial to economic security. Hence, this paper focuses on Japanese firms (companies or corporations) that played important roles in developing and forming the entire Japanese economy, and discusses various aspects from the viewpoint of corporate governance. The main arguments are as follows. First, the conditions, which maintained management discipline of corporations, have been gradually lost since the 1980s. Second, this loss led to a "vacuum of corporate governance", which contributed to the asset price bubble in the 1980s and the prolonged recession in the 1990s. Third, capital markets are becoming more influential due to increased ownership of Japanese corporations by foreign investors. Fourth, because Japanese corporations are adding Anglo-American elements into their governance, "hybrid" styles are increasing, and the style of governance is diversifying. Fifth, for Japanese companies to continue producing innovative products, two important tasks--improving the financial environment that underlies corporate governance and improving relevant laws and regulations-- must be completed.