EXECUTIVE SALARIES AS TOURNAMENT PRIZES AND EXECUTIVE BONUSES AS MANAGERIAL INCENTIVES IN JAPAN

In this paper, it is found that promotion probability has a strong eff ect on the ratio of executive salary to male employee salary. Generall y, executive bonuses are less likely to be paid in Japan if the annual dividends per share is less than 5 yen or net income is less than div idends. Executive bonuses depend mainly on accounting income, if they are paid. These results suggest that executive salaries and executive bonuses serve both as prizes of tournaments in promotion competition a nd as managerial incentives. J. Japan. Int. Econ., September 1997, 11( 3), pp. 319-346. Faculty of Economics, Hosei University, Aihara 4342, Machida-shi, Tokyo 194-02, Japan. (C) 1997 Academic Press.