Published online by Cambridge University Press: 08 August 2018
In Mar. 2010, Japan’s financial regulator implemented the country’s first legislation concerning the disclosure of director compensation for named individuals. Using the first publicly available data for Japanese executives, we document direct evidence on the level, structure, and mechanisms of chief executive officer (CEO) compensation in Japan and perform a matched-sample comparison between Japan and the United States. In contrast to the findings of recent studies showing that international differentials in CEO pay have largely disappeared since the mid-2000s, our results show strikingly large differences between the Japanese and American systems that are difficult to explain by differences in conventional incentive contracts.
We gratefully acknowledge financial support from the University of Hong Kong Seed Funding Programme and the Research School Grants Scheme at the Australian National University. We have benefited from helpful comments from Jarrad Harford (the editor), Po-Hsuan Hsu, Tse-Chun Lin, Neil Pearson, Xin Wang, Steven Xiangdong Wei, and Takeshi Yamada. We wish to thank an anonymous referee for insightful comments and constructive suggestions that significantly improved this article. All errors are our own.