Chief executive compensation and corporate groups in Japan: New evidence from micro data

Using micro data on chief executive officer (CEO) compensation of 154 large Japanese firms with and without financial keiretsu affiliation, I find that CEOs of keiretsu firms earn 21% less than those of independent firms, after controlling for performance and other relevant variables. I also find that CEO compensation of keiretsu firms is structured so as to reward CEOs for promoting capital investment and thus growth of the firm. These findings are consistent with the recent literature of Japanese corporate governance stressing the role of banks as monitors. (C) 1997 Elsevier Science B.V.