Top executive incentives in Germany, Japan and the USA: a comparison

  • Steven N. Kaplan
Part of the The New York University Salomon Center Series on Financial Markets and Institutions book series (SALO, volume 4)


Executive compensation and corporate governance systems have received an increasing amount of attention, from academics, government, the popular press and businesses themselves. Much of this attention has focused on differences between the US system and those of its strongest industrial competitors, Germany and Japan. The US corporate governance system is generally characterized as a market-based system. US capital markets are liquid and company ownership is relatively unconcentrated. Managers are supposedly monitored by an external market for corporate control and by boards of directors usually dominated by outsiders. The German and Japanese governance systems, in contrast, are characterized as relationship-oriented systems. Ownership in Germany and Japan is concentrated and capital markets are relatively illiquid. Managers there are allegedly monitored by a combination of banks, large corporate shareholders, and other intercorporate relationships that are maintained over long periods. An external market for corporate control is small, if not absent. Table 1 summarizes these differences.1


Corporate Governance Stock Return Firm Performance Governance System Supervisory Board 
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Copyright information

© Springer Science+Business Media Dordrecht 1999

Authors and Affiliations

  • Steven N. Kaplan
    • 1
  1. 1.University of ChicagoUSA

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