Executive Compensation in Japan: Estimating Levels and Determinants from Tax Records

36 Pages Posted: 7 Dec 2006

See all articles by Minoru Nakazato

Minoru Nakazato

University of Tokyo - Faculty of Law

J. Mark Ramseyer

Harvard Law School

Eric Bennett Rasmusen

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Date Written: December 2006

Abstract

Most studies of executive compensation have data on pay, but not on total income. Studies of executives in Japan do not even have good data on pay. Although we too lack direct data on Japanese salaries, from income tax filings we compile data on total executive incomes, and from financial records obtain some indication of which executives have substantial investment income. We find that Japanese executives earn far less than U.S. executives - holding firm size constant, about one-third the pay of their U.S. peers. Using tobit regression analysis, we further confirm that executive pay in Japan depends on firm size, with an elasticity of .24, but not on accounting profitability or stock returns. Corporate governance variables such as board composition have little or no effect on executive compensation, except that firms with large lead shareholders do appear to pay less.

Keywords: Executive compensation, Japan, Incentive pay, Corporate governance

JEL Classification: D24, G30, G34, J31, J33, J44, K23, L84

Suggested Citation

Nakazato, Minoru and Ramseyer, J. Mark and Rasmusen, Eric Bennett, Executive Compensation in Japan: Estimating Levels and Determinants from Tax Records (December 2006). Harvard Law and Economics Discussion Paper No. 567, Available at SSRN: https://ssrn.com/abstract=950365 or http://dx.doi.org/10.2139/ssrn.950365

Minoru Nakazato (Contact Author)

University of Tokyo - Faculty of Law ( email )

7-3-1 Hongo Bunkyo-Ku
Tokyo, 113
Japan

J. Mark Ramseyer

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-4878 (Phone)
617-496-6118 (Fax)

Eric Bennett Rasmusen

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

2810 S Dale Ct,
Enter your address line 2 here
Bloomington, IN 47401
United States
812-855-9219 (Phone)
812-855-3354 (Fax)

HOME PAGE: http://rasmusen.org

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
780
Abstract Views
6,041
Rank
59,161
PlumX Metrics