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Managerial Compensation, Corporate Governance, and Business Performance in Japan: Evidence Using New Micro Data

Author

Listed:
  • Hideaki Sakawa
  • Naoki Watanabel

Abstract

This paper examines the relations between the disciplinary role of Japanese relationship-oriented corporate governance mechanisms, such as keiretsu memberships and bank-appointed directors, and pay-performance sensitivity in Japan. Previous studies show that pay-performance sensitivity is positive and almost the same as in a market-oriented system like that of the USA. However, under the Japanese relationship-oriented system, pay-performance sensitivity may be controlled by financial keiretsu ties and bank-appointed directors. We find that the disciplinary mechanism of keiretsu memberships and bank-appointed monitors did not function well in Japan in the 1990s.

Suggested Citation

  • Hideaki Sakawa & Naoki Watanabel, 2009. "Managerial Compensation, Corporate Governance, and Business Performance in Japan: Evidence Using New Micro Data," Global COE Hi-Stat Discussion Paper Series gd08-031, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hst:ghsdps:gd08-031
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd08-031.pdf
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    More about this item

    Keywords

    Corporate Governance; Firm Performance; Japan; Keiretsu Memberships; Managerial Compensation;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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