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on Corporate Finance |
| By: | Nikolaj Schmidt; Ashley Taylor; Charles Goodhart; Amil Dasgupta |
| Abstract: | On 28-29 June 2007, the Financial Markets Group organised a conference covering topics under all three themes of its title, 'Cycles, Contagion and Crises', from the perspective of both developed and emerging economies. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp183&r=cfn |
| By: | Hideaki Sakawa; Naoki Watanabel |
| Abstract: | This paper examines the relations between the disciplinary role of Japanese relationship-oriented corporate governance mechanisms, such as keiretsu memberships and bank-appointed directors, and pay-performance sensitivity in Japan. Previous studies show that pay-performance sensitivity is positive and almost the same as in a market-oriented system like that of the USA. However, under the Japanese relationship-oriented system, pay-performance sensitivity may be controlled by financial keiretsu ties and bank-appointed directors. We find that the disciplinary mechanism of keiretsu memberships and bank-appointed monitors did not function well in Japan in the 1990s. |
| Keywords: | Corporate Governance, Firm Performance, Japan, Keiretsu Memberships, Managerial Compensation |
| JEL: | G30 G32 J33 L22 |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd08-031&r=cfn |
| By: | Aghion, Philippe; Van Reenen, John; Zingales, Luigi |
| Abstract: | We find that institutional ownership in publicly traded companies is associated with more innovation (measured by cite-weighted patents). To explore the mechanism through which this link arises, we build a model that nests the lazy-manager hypothesis with career-concerns, where institutional owners increase managerial incentives to innovate by reducing the career risk of risky projects. The data supports the career concerns model. First, whereas the lazy manager hypothesis predicts a substitution effect between institutional ownership and product market competition (and managerial entrenchment generally), the career-concern model allows for complementarity. Empirically, we reject substitution effects. Second, CEOs are less likely to be fired in the face of profit downturns when institutional ownership is higher. Finally, using instrumental variables, policy changes and disaggregating by type of owner we find that the effect of institutions on innovation does not appear to be due to endogenous selection. |
| Keywords: | career concerns; Innovation; Institutional Ownership; productivity; R&D |
| JEL: | G20 G32 O31 O32 O33 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:7195&r=cfn |