ABSTRACT
It is a widely held belief that the behavior of large Japanese companies is different from those of British counterparts, particularly in terms of their corporate governance style (Abegglen and Stalk 1985; Aoki 1988; Dore 1987). Although there are many studies on executive compensation, both in the UK and Japan (Cosh and Hugh 1997; Conyon 1995, 1997; Conyon, Gregg and Machin 1995; Conyon and Leech 1994; Conyon and Nicolitsas 1998; Gregg, Machin and Szymanski 1993; McKnight 1996; Kato 1997; Kaplan 1994; Xu 1997), much of the literature tends to focus on the relationship between directors’ pay and stock market performance. Many of these studies often take for granted the “Anglo-American style of corporate governance.” This chapter seeks to contrast the effect of corporate governance on the determinants of executive pay, by comparing the UK and Japan.
