Sakawa (corresponding author): Institute of Social and Economic Research, Osaka University, 6-1 Mihogaoka, Ibaraki, Osaka 567-0047, Japan. Email: firstname.lastname@example.org. Watanabel: Osaka School of International Public Policy, 1-31 Machinakaneyama, Toyonaka, Osaka, 560-0043, Japan. Email: email@example.com. The authors are grateful to Yoshiro Tsutsui, Akira Kohsaka, Marc Bremer, Jennifer Conrad, Keiichi Hori, Shinsuke Ikeda, Kotaro Inoue, Hideaki Kiyoshi Kato, Katsuyuki Kubo, Hideaki Miyajima, Tatsuyoshi Miyakoshi, Takuji Saito, Hirofumi Uchida, and anonymous referees for their valuable comments. This paper was presented at the 15th Nippon Finance Association and Financial Management Association's Doctoral Student Seminar at the 18th Asian Finance Association meeting. We thank all seminar participants. The study was financially supported by the 21st century COE program funded by the Ministry of Education, Culture, Sports, Science and Technology and the Murata Science Foundation.
Relationship between Managerial Compensation and Business Performance in Japan: New Evidence Using Micro Data*
Version of Record online: 11 DEC 2008
© 2008 The Authors. Journal compilation © 2008 East Asian Economic Association and Blackwell Publishing Ltd
Asian Economic Journal
Volume 22, Issue 4, pages 431–455, December 2008
How to Cite
Sakawa, H. and Watanabel, N. (2008), Relationship between Managerial Compensation and Business Performance in Japan: New Evidence Using Micro Data. Asian Economic Journal, 22: 431–455. doi: 10.1111/j.1467-8381.2008.00285.x
- Issue online: 11 DEC 2008
- Version of Record online: 11 DEC 2008
- Received 12 December 2007; accepted 26 June 2008
- board of directors;
- corporate governance;
- managerial compensation;
- ownership structure
This paper examines the relationship between the level of managerial compensation and the quality of corporate governance in Japan in the period following the bubble burst of 1991–1995. There are three main findings. First, Japanese firms with weaker governance have greater agency problems in that managerial opportunism extracts higher compensation and the firm performs relatively worse. Second, these agency problems were more severe during the recessionary period of 1994–1995. Finally, governance structures in industries with higher managerial compensation are relatively weaker than in other industries.