Executive Compensation in Japan: Estimating Levels and Determinants from Tax Records, 14 December 2007

By Minoru Nakazato, J. Mark Ramseyer & Eric B. Rasmusen

Abstract: Most studies of executive compensation have data on pay, but not on total income. Studies of executives in Japan do not even have good data on pay. Although we too lack direct data on Japanese salaries, from income tax filings we compile data on total executive incomes, and from financial records obtain some indication of which executives have substantial investment income. We find that Japanese executives earn far less than U.S. executives -- holding firm size constant, about one-third the pay of their U.S. peers. Using tobit regression analysis, we further confirm that executive pay in Japan depends on firm size, with an elasticity of .24, but not on accounting profitability or stock returns. Corporate governance variables such as board composition have little or no effect on executive compensation, except that firms with large lead shareholders do appear to pay less.

Drafts of the paper are available in MS-Word and pdf.

A dataset in Stata 9 format will at some point be here. An incomplete key is here.

We will have the Stata Do files for Tables 6 and 7and 8and 9and 10.

We will have the Stata Log files for Tables 6 and 7and 8and 9and 10.

We won't update these STATA files as we go along, but once the paper is published we will link to the final versions and get the data set posted.
"Public and Private Firm Compensation Compared: Evidence from Japanese Tax Returns" is available in MS-Word here.

Minoru Nakazato Univ. Tokyo Law Faculty Bunkyo-ku, Tokyo nakazato@j.u-tokyo.ac.jp

J. Mark Ramseyer Harvard Law School Cambridge, MA 02138 ramseyer@law.harvard.edu

Eric B. Rasmusen Kelley School of Business Bloomington, IN 47405 erasmuse@indiana.edu

URL: http://www.rasmusen.org/papers/exec/exec.htm. Indiana University, Department of Business Economics and Public Policy, in the Kelley School of Business , BU 456, 1309 East Tenth Street, Bloomington, Indiana 47405-1701, (812)855-9219. Comments: Erasmuse@ Indiana.edu.