Long-Term Employment Contracts in Japanese Companies and the Corporate Profitability in the Post Economic Bubble Era

Journal of Financial Management and Analysis, Vol. 22, No. 2, July-December 2009

Posted: 23 Mar 2010

See all articles by Dr. Hamid Hassan

Dr. Hamid Hassan

FAST Business School

Yasuo Hoshino

Aichi University - Graduate School of Accounting; University of Tsukuba - Graduate School of Systems and Information Engineering

Date Written: 2009

Abstract

The long-term employment contracts that helped to explain the once superior performance Japanese companies have come under pressure after the burst of the economic bubble in Japan after 1990. A large number of long-tenured, highly paid employees can become a financial burden for a company. Though companies have been reluctant to change this traditional structure, an adverse economic environment made it difficult for the system to fulfill its functional prerequisites. This analysis of 156 electronics companies in Japan confirms that the presence of long-term employment system during an economic slowdown can have a negative effect on corporate profitability.

Keywords: Long-Term Employment, Seniority-Based Promotion, Corporate Profitability, Japan

JEL Classification: J31, J33, J41, J64, N35

Suggested Citation

Hassan, Hamid and Hoshino, Yasuo, Long-Term Employment Contracts in Japanese Companies and the Corporate Profitability in the Post Economic Bubble Era (2009). Journal of Financial Management and Analysis, Vol. 22, No. 2, July-December 2009. Available at SSRN: https://ssrn.com/abstract=1576147

Hamid Hassan (Contact Author)

FAST Business School ( email )

B- Block, Faisal Town
Lahore, Punjab 54770
Pakistan

Yasuo Hoshino

Aichi University - Graduate School of Accounting ( email )

2-10-31 Tsutsui Higashi-ku
Higashi-ku
Nagoya, Aichi 461-8264
Japan
+81-52-937-8264 (Phone)
+81-52-937-8264 (Fax)

HOME PAGE: http://leo.aichi-u.ac.jp/~hoshino/English.html

University of Tsukuba - Graduate School of Systems and Information Engineering

Ibaraki, 305-8573
Japan

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