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Director's Incentives in Japan and the UK

Vierteljahrshefte zur Wirtschaftsforschung 2 / 2001, S. 228-232

Katsuyuki Kubo

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Abstract

As it is widely believed that the behaviour of large Japanese companies is different from that of their British counterparts, hypothesises that the directors in both countries may have different financial incentives. The research estimates the determinants of executive compensation, using the micro data of listed companies in both countries. Our result suggests that directors in Japan may have little incentive to pursue shareholders' interest while directors in the UK may have an incentive to maximise its value in stock markets. These results may be consistent with the view that large companies in Japan often neglect shareholders' interest.

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