Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan

This study investigates the effects of corporate governance factors on the firm performance and executive compensation linkage. Specifically, we examine how domestic corporate-appointed directors, bank-appointed directors and foreign ownership moderate the relationship between firm profitability, sa...

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Main Authors: COLPAN, Asli M., YOSHIKAWA, Toru
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2012
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/4579
https://ink.library.smu.edu.sg/context/lkcsb_research/article/5578/viewcontent/Performance_Sensitivity_Pay_av_2012.pdf
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spelling sg-smu-ink.lkcsb_research-55782020-03-20T05:39:58Z Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan COLPAN, Asli M. YOSHIKAWA, Toru This study investigates the effects of corporate governance factors on the firm performance and executive compensation linkage. Specifically, we examine how domestic corporate-appointed directors, bank-appointed directors and foreign ownership moderate the relationship between firm profitability, sales growth, and executive bonus pay in Japanese firms. Using a sample of the largest Japanese manufacturing companies from 1997 to 2007, we find that corporate-appointed directors positively moderate the relationship between firm growth and bonus pay, while foreign shareholders exhibit a positive moderating effect on the relationship between firm profitability and bonus pay. Bank-appointed directors are straddled between their profitability orientation and relational role: They link firm profitability and bonus pay, but also show positive influence on the firm growth and bonus pay relationship. Our findings offer insights to stakeholders to pay attention to ownership structure and board composition in acknowledging the varied financial motivation of executives to pursue growth and/or profitability. 2012-11-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research/4579 info:doi/10.1111/j.1467-8683.2012.00923.x https://ink.library.smu.edu.sg/context/lkcsb_research/article/5578/viewcontent/Performance_Sensitivity_Pay_av_2012.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Corporate Governance Executive Compensation Ownership Board of Directors Japan Asian Studies Human Resources Management Strategic Management Policy
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Corporate Governance
Executive Compensation
Ownership
Board of Directors
Japan
Asian Studies
Human Resources Management
Strategic Management Policy
spellingShingle Corporate Governance
Executive Compensation
Ownership
Board of Directors
Japan
Asian Studies
Human Resources Management
Strategic Management Policy
COLPAN, Asli M.
YOSHIKAWA, Toru
Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan
description This study investigates the effects of corporate governance factors on the firm performance and executive compensation linkage. Specifically, we examine how domestic corporate-appointed directors, bank-appointed directors and foreign ownership moderate the relationship between firm profitability, sales growth, and executive bonus pay in Japanese firms. Using a sample of the largest Japanese manufacturing companies from 1997 to 2007, we find that corporate-appointed directors positively moderate the relationship between firm growth and bonus pay, while foreign shareholders exhibit a positive moderating effect on the relationship between firm profitability and bonus pay. Bank-appointed directors are straddled between their profitability orientation and relational role: They link firm profitability and bonus pay, but also show positive influence on the firm growth and bonus pay relationship. Our findings offer insights to stakeholders to pay attention to ownership structure and board composition in acknowledging the varied financial motivation of executives to pursue growth and/or profitability.
format text
author COLPAN, Asli M.
YOSHIKAWA, Toru
author_facet COLPAN, Asli M.
YOSHIKAWA, Toru
author_sort COLPAN, Asli M.
title Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan
title_short Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan
title_full Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan
title_fullStr Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan
title_full_unstemmed Performance Sensitivity of Executive Pay: The Role of Foreign Investors and Affiliated Directors in Japan
title_sort performance sensitivity of executive pay: the role of foreign investors and affiliated directors in japan
publisher Institutional Knowledge at Singapore Management University
publishDate 2012
url https://ink.library.smu.edu.sg/lkcsb_research/4579
https://ink.library.smu.edu.sg/context/lkcsb_research/article/5578/viewcontent/Performance_Sensitivity_Pay_av_2012.pdf
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