Managerial Incentive Mechanisms and Turnover of Company Presidents and Directors in Japan

Naohito Abe ()

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: The role of directors in Japanese companies is unique in a number of ways. One such characteristic is the dual nature of their role, which encompasses both monitoring and managing responsibilities. This paper considers their role in management. Empirical analysis with detailed data for each director studied reveals that directors take responsibility for performance, and that executive turnover is one of the main managerial incentive mechanisms. Abnormal turnover of a president does not cause further resignation among directors. Outside directors decrease the turnoverperformance sensitivity of presidents, suggesting their different role in corporate governance in Japan from that in the United States.

Keywords: Corprrate Governance; Board of Directors; Turnover; Incentive Mechanism (search for similar items in EconPapers)
JEL-codes: G30 J53 (search for similar items in EconPapers)
Date: 2004-02
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:hst:hstdps:d03-13

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