Top Executive Rewards and Firm Performance: A Comparison of Japan and the U.S
Steven N. Kaplan
University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)
This paper studies top executive turnover and compensation, and their relation to firm performance in the largest Japanese and U.S. companies. Japanese executive turnover and compensation are related to earnings, stock return, and sales performance measures. The fortunes of Japanese top executives, therefore, are positively correlated with stock performance and with current cash flows (or with factors contributing to such performance). The relations for the Japanese executives are generally economically and statistically similar to those for their U.S. counterparts, particularly for sales growth. There is some evidence, however, that the fortunes of Japanese executives are more sensitive to low income and less sensitive to stock returns than those of U.S. executives.
JEL Classification: G3working papers series
Date posted: October 24, 1999
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