TOP EXECUTIVE REWARDS AND FIRM PERFORMANCE - A COMPARISON OF JAPAN AND THE UNITED-STATES

This paper studies top executive turnover and compensation, and their relation to firm performance in the largest Japanese and U.S. companie s. Japanese executive turnover and compensation are related to earning s, stock returns, and, to a lesser extent, sales performance measures. The fortunes of Japanese top executives, therefore, are positively co rrelated with stock performance and current cash flows (or with factor s contributing to such performance). The relations for the Japanese ex ecutives are generally economically and statistically similar to those for their U.S. counterparts. There is some evidence, however, that th e fortunes of Japanese executives are more sensitive to low income but less sensitive to stock returns than those of U.S. executives.