Relationship between Managerial Compensation and Business Performance in Japan: New Evidence Using Micro Data* |
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Authors: | Hideaki Sakawa Naoki Watanabel |
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Institution: | 1. Institute of Social and Economic Research, Osaka University, 6‐1 Mihogaoka, Ibaraki, Osaka 567‐0047, Japan;2. Osaka School of International Public Policy, 1‐31 Machinakaneyama, Toyonaka, Osaka, 560‐0043, Japan |
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Abstract: | 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. |
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Keywords: | board of directors corporate governance managerial compensation ownership structure G30 G32 J33 L22 |
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