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Executive Compensation Policy and Company Performance in Japan
Author(s) -
Kubo Katsuyuki
Publication year - 2005
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/j.1467-8683.2005.00437.x
Subject(s) - executive compensation , pay for performance , shareholder , compensation (psychology) , value (mathematics) , business , work (physics) , accounting , shareholder value , economics , finance , corporate governance , psychology , microeconomics , incentive , engineering , computer science , social psychology , mechanical engineering , machine learning
The purpose of this paper is to analyse whether companies’“way to pay their director” matters or not. Firstly, we fail to find a positive relationship between the performance–pay sensitivity and company performance. Thus, these results do not support our hypothesis that those companies that intensify the performance–pay sensitivity are more likely to improve their performance. In addition, this research fails to find a positive relationship between the change of pay policy and performance. These results are consistent with previous studies that directors’ pay is not designed to motivate directors to work toward shareholders’ value.