This paper examines how professional managers diffused among cotton spinning companies in prewar Japan, and analyzes the determinants as well as implications of the employment of professional managers. While simple scale variables such as paid-in capital and production did not correlate with employment of professional managers, those variables reflecting complexity of management, such as number of factories and dummy variable of integrated production, have positive correlation with it. At the same time, supply of managerial capability by owners negatively correlates with employment of professional managers. Employment of professional managers did not have a significant effect on corporate profitability. This result suggests that a positive effect of introducing management skills and a negative effect of agency costs canceled each other.