Managerial Incentive Mechanisms and Turnover of Company Presidents and Directors in Japan
AbstractThe role of directors in Japanese companies is unique in a number of ways. One such characteristic is the dual nature of their role, which encompasses both monitoring and managing responsibilities. This paper considers their role in management. Empirical analysis with detailed data for each director studied reveals that directors take responsibility for performance, and that executive turnover is one of the main managerial incentive mechanisms. Abnormal turnover of a president does not cause further resignation among directors. Outside directors decrease the turnoverperformance sensitivity of presidents, suggesting their different role in corporate governance in Japan from that in the United States.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d03-13.
Date of creation: Feb 2004
Date of revision:
Corprrate Governance; Board of Directors; Turnover; Incentive Mechanism;
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
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- Powers, Eric A., 2005. "Interpreting logit regressions with interaction terms: an application to the management turnover literature," Journal of Corporate Finance, Elsevier, vol. 11(3), pages 504-522, June.
- Naohito Abe & Taehun Jung, 2004. "Cross-Shareholdings, Outside Directors, and Managerial Turnover: The Case of Japan," Hi-Stat Discussion Paper Series d04-38, Institute of Economic Research, Hitotsubashi University.
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