Equity Ownership and The Determination of Managers' Bonuses in Japanese Firms  

Oleh:

Murase, Hideaki

Jenis: Article from Bulletin/Magazine
Dalam koleksi: JAPAN AND THE WORLD ECONOMY vol. 10 no. 3 (1998), page 321-332.
Topik: OWNERSHIP; equity ownership; determination; managers bonuses; firms

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ47.8 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

Lihat Detail Induk

Isi artikel

This paper empirically analyzes the relationship between ownership structure and the determination of managers' bonuses in Japanese firms. In the analysis, we obtain two notable findings. First, equity ownership by non-financial corporations increases the sensitivity of managers' bonuses to firms' profits. Second, equity ownership by financial institutions increases the magnitude of bonus cuts in times of firms' distress. These findings suggest that cross shareholdings effectively transfer residual claims from shareholders to managers. They also suggest that, when firms are performing badly, financial institutions intervene in management and deprive managers of residual claims. Our empirical results imply the existence of two complementary managerial incentive mechanisms in Japan, which may substitute for external takeover threats.

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