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Top Executive Rewards and Firm Performance: A Comparison of Japan and the U.S

  • Steven N. Kaplan

This paper compares CEO and top management turnover and its relation to firm performance in the largest companies (by sales) in Japan and the U.S. Japanese top managers are older and have shorter tenures as top managers than their U.S. counterparts. Overall, however, turnover-performance relations are economically and statistically similar: turnover is negatively related to stock, sales, and earnings performance in both countries. Turnover in Japan is particularly sensitive to low earnings. Evidence on executive compensation confirms that Japanese executives own less stock and receive lower cash compensation than U.S. executives. Cash compensation performance relations, nevertheless, are also similar in magnitude to those found in previous work for U.S. executives.

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File URL: http://www.nber.org/papers/w4065.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4065.

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Date of creation: May 1992
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Publication status: published as Journal of Political Economy, vol. 102, no. 3, pp. 510-546, (June 1994).
Handle: RePEc:nbr:nberwo:4065
Note: CF
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  1. Grundfest, Joseph A., 1990. "Subordination of American capital," Journal of Financial Economics, Elsevier, vol. 27(1), pages 89-114, September.
  2. repec:sae:ilrrev:v:43:y:1990:i:3:p:30-51 is not listed on IDEAS
  3. Weisbach, Michael S., 1988. "Outside directors and CEO turnover," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 431-460, January.
  4. Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1990. "The role of banks in reducing the costs of financial distress in Japan," Journal of Financial Economics, Elsevier, vol. 27(1), pages 67-88, September.
  5. French, Kenneth R. & Poterba, James M., 1991. "Were Japanese stock prices too high?," Journal of Financial Economics, Elsevier, vol. 29(2), pages 337-363, October.
  6. Kato, Takao & Rockel, Mark, 1992. "Experiences, credentials, and compensation in the Japanese and U.S. managerial labor markets: Evidence from new micro data," Journal of the Japanese and International Economies, Elsevier, vol. 6(1), pages 30-51, March.
  7. Rosen, S., 1990. "Contracts and Market for Executives," University of Chicago - Economics Research Center 90-12, Chicago - Economics Research Center.
  8. Takeo Hoshi & Anil K. Kashyap & David Scharfstein, 1989. "Corporate structure, liquidity, and investment: evidence from Japanese industrial groups," Finance and Economics Discussion Series 82, Board of Governors of the Federal Reserve System (U.S.).
  9. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-64, April.
  10. Benjamin E. Hermalin & Michael S. Weisbach, 1988. "The Determinants of Board Composition," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 589-606, Winter.
  11. Sherwin Rosen, 1990. "Contracts and the Market for Executives," NBER Working Papers 3542, National Bureau of Economic Research, Inc.
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