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Indiana University Bloomington


The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and Publications

Journal Articles

Executive Compensation in Japan: Estimating Levels and Determinants from Tax Records

2011, Journal of Economics & Management Strategy

Minoru Nakazato, J. Mark Ramseyer, Eric Bennett Rasmusen


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.


Nakazato, Minoru, J. Mark Ramseyer, and Eric Bennett Rasmusen (2011), "Executive Compensation in Japan: Estimating Levels and Determinants from Tax Records," Journal of Economics and Management Strategy, Vol. 20, No. 3, Fall, pp. 843-885.