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Managerial Incentive Mechanisms and Turnover of Company Presidents and Directors in Japan

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  • Naohito Abe

Abstract

The 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.

Suggested Citation

  • Naohito Abe, 2004. "Managerial Incentive Mechanisms and Turnover of Company Presidents and Directors in Japan," Hi-Stat Discussion Paper Series d03-13, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:hstdps:d03-13
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    File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2003/pdf/D03-13.pdf
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    Cited by:

    1. 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.
    2. 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.
    3. Moriguchi, Chiaki, 2010. "Top wage incomes in Japan, 1951-2005," Journal of the Japanese and International Economies, Elsevier, vol. 24(3), pages 301-333, September.

    More about this item

    Keywords

    Corprrate Governance; Board of Directors; Turnover; Incentive Mechanism;

    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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