Executive pay in Japan: The role of bank-appointed monitors and the main bank relationship

Naohito Abe, Noel Gaston, Katsuyuki Kubo

研究成果: Article査読

17 被引用数 (Scopus)


A feature of tournament models is that executive compensation is not independent of the wages paid at lower levels of the corporate hierarchy. Agency models show that compensation based on firm performance is a means by which incentives can be provided to executives once a promotion tournament has been resolved. In this paper, we combine elements of both models and show that the existence of an outsider who monitors the firm's activities will lower the sensitivity of pay to firm performance for top executives and reduce the importance of tournament-based incentives. Using panel data for 55 Japanese electronics firms, we find support for the notion that bank-appointed Board members help monitor top executives and that tournament considerations are a particularly important feature of executive compensation in Japan.

ジャーナルJapan and The World Economy
出版ステータスPublished - 2005 8

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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